Appeal Details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 90240 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 1 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-07-2015
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
09-07-2015
Assessment Year
2007-2008
Appeal Filed On
06-06-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO.608/CHD/2014 ASSESSMENT YEAR:2007-08 LATE SH. NARINDER SINGH, VS. DCIT THROUGH HIS WIFE AND L/H CIRCLE SMT. SHIV DEV KAUR, SANGRUR RAJA NARINDER SINGH STREET, NABHA, DISTT. PATIALA PAN NO. AFDPS0158P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. N.K. SAHI RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 09/07/2015 DATE OF PRONOUNCEMENT : 15/07/2015 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28/03/2014 PASSED BY THE CIT(A), PATIALA. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUND WHICH ARE AS UNDER : 1. THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN CONFIRMING ASSESSMENT OF LONG TERM CAPITAL GAINS IN THE HANDS OF THE APPELLANT ASSESSEE RATHER THAN THE PUNJABI CO-OPERATIVE HOUSE BUILDING SOCIETY LTD., MOHALI IN WHICH THE APPELLANT IS A MEMBER. 2. THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ASSESSMENT OF LONG TERM CAPITAL GAIN S IN THE PREVIOUS YEAR 2006-07 RELEVANT TO THE A.Y. 2007-08. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ORIG INALLY ASSESSEE FILED RETURN OF INCOME DECLARING INCOME AMOUNTING TO RS. 11,16,8 22/- INCLUDING LONG TERM CAPITAL GAIN OF RS. 8,21,655/-. THIS RETURN WAS PRO CESSED UNDER SECTION 143(1). 2 LATER ON INCOME RETURN WAS TRANSFERRED TO ACIT, CIR CLE SANGRUR BECAUSE INCOME WAS MORE THAN RS. 5 LACS. A NOTICE UNDER SECTION 14 8 WAS ISSUED AND SERVED UPON THE ASSESSEE. MEANWHILE ASSESSEE HAD EXPIRED A ND THEREFORE AFTER THE ENQUIRIES LEGAL HEIRS SMT. SHIV DEV KAUR(WIFE), SH. HARINDER SINGH (SON) AND SMT. CHARANKANWAL KAUR(DAUGHTER) WERE SUBSTITUTED. NOTIC E UNDER SECTION 148 WAS ISSUED BECAUSE AO HAD RECEIVED INFORMATION FROM JCI T, RANGE VI, MOHALI, VIDE LETTER NO. F.NO. JCIT/R-VI/2009-10/MHL/14443 DT. 29 .09.2009, IN WHICH IT WAS POINTED OUT THAT WHILE CONDUCTING THE ENQUIRES IN T HE CASE OF HOUSING SOCIETY IT WAS GATHERED THAT A HOUSING SOCIETY CONSISTING OF 95 PERCENT AND EX-MLAS OF PUNJAB LEGISLATIVE ASSEMBLY AFFIRMED A SOCIETY KNOW N AS THE PUNJABI CO-OP. HOUSE BUILDING SOCIETY LTD. MOHALI [ IN SHORT SOCI ETY]. THE SOCIETY WAS OWNER OF 21.2 ACRES OF LAND IN VILLAGE KANDAL DISTRICT MOHAL I. THE SOCIETY HAD ENTERED INTO DEVELOPMENT AGREEMENT WITH M/S TATA HOUSING DEVELOP MENT COMPANY LTD. MUMBAI AND HASH BUILDERS (P) LTD. ASSESSEE WAS OWNE R OF A PLOT MEASURING 500 SQ. YD. AND ASSESSEE WAS TO RECEIVE 82,50,000/- IN CASH AND FLAT MEASURING 2250 SQ. FT. TO BE CONSTRUCTED BY M/S TATA HOUSING DEVEL OPMENT COMPANY LTD. TO BE VALUED @ RS. 4500/- SQ. FT. SINCE ASSESSEE HAD NOT DECLARED THE FULL CAPITAL GAIN THEREFORE, AO AFTER DETAILED DISCUSSION COMPUTED TH E CAPITAL GAIN AS UNDER: CONSIDERATION RECEIVABLE IN CASH: RS. 82,50,000/- VALUE OF ONE FLATS (2250 X 4500) (+) RS. 1,01,25, 000/- FULL VALUE OF CONSIDERATION RS. 1,83,75,000/- LESS: COST OF ACQUISITION (INDEX COST) (-) RS. 6,78,345 /- LONG TERM CAPITAL GAIN RS. 1,76,96,655/- THE ABOVE CAPITAL GAIN WAS ADDED TO THE TAXABLE INC OME OF THE ASSESSEE. 4. ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY THE LD. CIT(A). 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE FAIRLY CO NCEDED THAT ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE ORDER OF TRIBUNAL IN CASE OF CHARANJIT SINGH ATWAL VS. I.T.O & OTHERS IN ITA NO. 448/CHD/2011 AND OTHERS. 6. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDER OF LD. CIT(A) 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE FIND THAT IDENTICAL ISSUES CAME UP FOR CONSIDERATION OF TRIBUNAL IN CASE OF CH ARANJIT SINGH ATWAL VS. ITO (SUPRA). THIS ISSUE WAS ADJUDICATED VIDE PARA 27 TO 113 WHICH ARE AS UNDER: 3 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY BOTH THE PARTIES I N THE LIGHT OF MATERIAL ON RECORD, PAPER BOOKS AND VARIOUS JUDGMENTS CITED BY THE PARTIES. THE MAIN ISSUE IS WHETHER ASSESSEE IS LIABLE TO CAPITAL GAIN TAX IN THE YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 2007-08 IN VIEW O F THE JDA. FOR CHARGING CAPITAL GAINS, THE CHARGING SECTION IS 45 AND THE R ELEVANT PORTION IS AS UNDER:- SECTION 45. [(1)] ANY PROFITS OR GAINS ARISING FRO M THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE P REVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS [54, 54B, [ [54D, [54E, [54EA, 54EB,] 54F [ 54G AND 54H ], BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD CAPITAL GA INS, AND SHALL BE DEEMED TO BE THE INCOME OF THE P REVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. 28 THE PLAIN READING OF THE ABOVE PROVISION WOULD S HOW THAT CHARGING AN ITEM OF INCOME UNDER THE HEAD CAPITAL GAINS REQUI RE THREE INGREDIENTS I.E. (I) THERE SHOULD BE SOME PROFIT. (II) SUCH PROFIT MUST BE ARISING ON ACCOUNT OF TRANSFER AND (III) THERE SHOULD BE CAPITAL ASSET W HICH HAS BEEN TRANSFERRED. THERE IS NO DISPUTE THAT A CAPITAL ASSET WAS INVOLV ED AND THERE WAS SOME PROFIT ALSO I.E. WHY ASSESSEE HAS HIMSELF RETURNED INCOME UNDER THE HEAD CAPITAL GAINS;. THE DISPUTE IS MAINLY ON ACCOUNT OF TRANSFER AND THAT TOO WHETHER THE TRANSFER COULD BE COVERED UNDER CLAUSES (II), (V) & (VI) OF SECTION 2(47) SO AS TO BRING INTO PICTURE THE WHOLE OF CONS IDERATION ARISING ON TRANSFER OF SUCH ASSETS. WE SHALL DEAL WITH EACH OF THE ASPE CT IN DETAIL AT APPROPRIATE TIME. 29. APART FROM CHARGING PROVISIONS U/S 45 ANOTHER I MPORTANT PROVISION IS SECTION 48 WHICH DEALS WITH THE MODE OF COMPUTATION AND RELEVANT PORTION READS AS UNDER:- 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RES ULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOW ING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO: 30 AGAIN PLAIN READING WOULD SHOW THAT CAPITAL GAIN WOULD BE COMPUTED BY CONSIDERING THE FULL VALUE OF CONSIDERATION WHETHER RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THEREFORE, IT IS NOT ONLY THE CONSIDERATION RECEIVED WHICH IS RELEVANT BUT THE CONSIDERATION WHICH HAS A CCRUED IS ALSO RELEVANT. 31. THE EXPRESSION TRANSFER HAS BEEN DEFINED U/S 2(47) OF THE ACT WHICH READS AS UNDER:- 2 (47) [TRANSFER, IN RELATION TO A CAPITAL ASSET , INCLUDES, (I)THE SALE , EXCHANGE OR RELINQUISHMENT OF THE A SSET ; OR (II)THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR (III)THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV)IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK- IN-TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREA TMENT ;] [OR] [(IVA)THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR] [(V)ANY TRANSACTION INVOLVING THE ALLOWING OF TH E POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REF ERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR (VI)ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE S OCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY O F ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFER RING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE P ROPERTY. EXPLANATION.FOR THE PURPOSES OF SUB-CLAUSES (V) A ND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME M EANING AS IN CLAUSE (D) OF SECTION 269UA ;] CLAUSES (V) & (VI) TO SECTION 2(47) OF THE ACT HAVE BEEN INSERTED BY FINANCE ACT, 1987 W.E.F. 1.4.1988. THE PURPOSE OF THIS INS ERTION HAS BEEN EXPLAINED BY CBDT IN CIRCULAR NO. 495 DATED 22.9.1987. THE R ELEVANT PART 11.1 AND 11.2 OF THE CIRCULAR READS AS UNDER:- 11.1 THE EXISTING DEFINITION OF THE WORD ' TRANSF ER ' IN SECTION 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PURCHASER, BY WAY OF BECOMING A MEMBER OR ACQUIRING SHARES IN A CO-OPERATIVE SOC IETY, COMPANY, OR AS WAY OF ANY AGREEMENT OR ANY ARRANGEM ENT WHEREBY SUCH ANY BUILDING WHICH IS EITHER BEING CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED. TRANSAC TIONS OF THE NATURE REFERRED TO ABOVE ARE NOT REQUI RED TO BE REGISTERED UNDER THE REGISTRATION ACT, 1908. SUCH A RRANGEMENTS CONFER THE PRIVILEGES OF OWNERSHIP WITH OUT 4 TRANSFER OF TITLE IN THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY IN MULTI-STORE YED CONSTRUCTIONS IN BIG CITES. THE DEFINITION ALSO DOE S NOT COVER CASES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED TO IN SECTION 53A OF TRANSFER OF PR OPERTY ACT, 1882. NEW SUB-CLAUSES (V) & (VI) HAVE BEEN INSERTED IN SECTION2(47) TO PREVENT AVOIDANCE OF CAPITAL G AINS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. 11.2 THE NEWLY INSERTED SUB-CLAUSE (VI) OF SECTION 2(47) HAS BROUGHT IN TO THE AMBIT OF TRANSFER, THE PRACTICE OF ENJOYMENT OF PROPERTY RIGHTS THROUGH WH AT IS COMMONLY KNOWN AS POWER OF ATTORNEY ARRANGEME NTS. THE PRACTICE IN SUCH CASES IS ADOPTED NORMALLY WHER E TRANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTED. A PERSON HOLDING THE POWER OF ATTORNEY IS AUTHORIZED THE POW ERS OF OWNER, INCLUDING THAT OF MAKING CONSTRUCTION . THE LEGAL OWNERSHIP IN SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 32 BEFORE INSERTION OF THE CLAUSE (V) & (VI) TO SE CTION 2(47) OF THE ACT, THE POSITION OF LAW WAS THAT UNLESS AND UNTIL A SALE DE ED WAS EXECUTED FOR TRANSFER OF IMMOVABLE PROPERTY, THE SAME COULD NOT BE CONSTR UED AS TRANSFER FOR THE PURPOSE OF CHARGING CAPITAL GAIN TAX. THIS WAS PAR TICULARLY SO IN THE LIGHT OF VARIOUS JUDGMENTS PARTICULARLY THE JUDGMENT OF HON' BLE APEX COURT IN THE CASE OF ALAPATI VENKATRAMIAN V CIT (57 ITR 185) (SC). I N THIS CASE IT WAS HELD THAT IN THE CONTEXT OF TRANSFER FOR THE PURPOSE OF CAPIT AL GAIN TAX, WHAT IS MEANT BY TRANSFER IS THE EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET BY A TRANSFEROR TO THE TRANSFEREE. DELIVERY OF POSSESSION AND AGREEMENT T O SELL BY ITSELF COULD NOT CONSTITUTE CONVEYANCE OF THE IMMOVABLE PROPERTY. I N THE MEANTIME APART FROM THIS DECISION A PRACTICE CAME INTO VOGUE BY WHICH C ERTAIN PROPERTIES WERE BEING TRANSFERRED WITHOUT EXECUTING THE PROPER SALE DEEDS. THIS WAS BEING DONE BECAUSE THERE WAS RESTRICTION ON SALE OF PROPE RTIES IN VARIOUS TOWNS E.G. IN CASE OF LEASE HOLD PLOTS AND FLATS IN DELHI IF T HE SAME WERE TO BE TRANSFERRED, PERMISSION WAS REQUIRED TO BE TAKEN FR OM THE GOVERNMENT / DDA AND TRANSFEROR WAS REQUIRED TO PAY 50% OF THE MARKE T VALUE COST (I.E. UNEARNED INCREASE) TO THE GOVERNMENT. TO AVOID SUCH PAYMENTS AND / OR ALSO TO AVOID THE PAYMENT OF STAMP DUTY OR CUMBERSOME PR OCEDURE OF OBTAINING PERMISSION, SOME PROPERTIES WERE BEING SOLD BY WAY OF SALE AGREEMENT AND ALSO EXECUTION OF GENERAL POWER OF ATTORNEY AND POS SESSION WAS GIVEN ON RECEIPT OF FULL CONSIDERATION WITHOUT EXECUTING THE PROPER SALE DEEDS ETC. WHICH AS MENTIONED EARLIER WAS NOT EVEN PERMISSIBLE IN SOME CASES. THESE TRANSACTIONS ARE POPULARLY CALLED POWER OF ATTORNE Y TRANSACTIONS. TO AVOID THESE AND TO STOP THE LEAKAGE OF REVENUE, THE PARLI AMENT HAS INSERTED CLAUSES (V) & (VI) TO SECTION 2(47) SO AS SUCH TYPE OF TRAN SACTIONS ARE ALSO BE BROUGHT IN TO TAXATION NET. HOWEVER, INTERPRETATIONS OF TH ESE CLAUSES HAS LED TO LOT OF LITIGATION AND THE MAIN POINT OF LITIGATION WAS TH AT AT WHAT POINT OF TIME THE POSSESSION CAN BE SAID TO HAVE BEEN GIVEN. IN THE P RESENT CASE, THE REVENUE HAS MAINLY RELIED ON TWO DECISIONS NAMELY (I) CHAT URBHUJ DWARKADAS KAPADIA V CIT 260 ITR 491 (BOM.) AND; (II) AUTHORITY FOR AD VANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBIR SINGH SARKARIA 294 ITR 196. 33. IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V C IT (SUPRA), THE FACTS BEFORE THE HON'BLE BOMBAY HIGH COURT WERE THAT ASSE SSEE WHO WAS AN INDIVIDUAL HAD 44/192 UNDIVIDED SHARE IN AN IMMOV ABLE PROPERTY IN GREATER BOMBAY WHICH CONSISTED OF VARIOUS LANDS AND BUILDIN GS. BY AGREEMENT DATED AUGUST 18, 1994, THE ASSESSEE AGREED TO SELL TO FLO REAT INVESTMENT LTD, (HEREIN REFERRED TO FLOREAT) HIS SHARE OF IMMOVAB LE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 1,85,63,220/- WITH RIGHT TO S AID FLOREAT TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE RULES / REGULATION S FRAMED BY LOCAL AUTHORITIES. FOR THIS PURPOSE, THE ASSESSEE ALSO A GREED TO EXECUTE A LIMITED POWER OF ATTORNEY AUTHORIZING FLOREAT TO DEAL WITH THE PROPERTY AND ALSO OBTAIN PERMISSIONS AND APPROVALS FROM VARIOUS AUTHORITIES. UNDER CLAUSE 11 OF THE AGREEMENT, IT WAS PROVIDED THAT AFTER FLOREAT WAS G IVEN AN IRREVOCABLE LICENSE TO ENTER UPON THE ASSESSEES SHARE OF PROPERTY AND AFTER FLORET INVESTMENT HAVE OBTAINED ALL NECESSARY APPROVALS, THE FLORET W AS ENTITLED TO DEMOLISH VARIOUS BUILDINGS FOR SETTLING THE CLAIMS OF THE TE NANTS. UNDER CLAUSE 14 OF THE AGREEMENT, THE ASSESSEE WAS ENTITLED TO RECEIVE PRO PORTIONATE RENT TILL THE PAYMENT OF LAST INSTALLMENTS AND TILL THAT TIME ASS ESSEE WAS BOUND TO PAY ALL OUTGOINGS. UNDER CLAUSE 20 OF THE AGREEMENT, IT W AS AGREED THAT SALE SHALL BE COMPLETED BY EXECUTION OF CONVEYANCE, HOWEVER, T ILL THE MATTER WAS ADJUDICATED BY THE HON'BLE HIGH COURT, NO CONVEYANC E WAS EXECUTED. PURSUANT TO THIS AGREEMENT, FLOREAT OBTAINED VARIOU S PERMISSIONS NAMELY (I) CLEARANCE FROM CRZ AUTHORITY DATED FEBRUARY 7, 1996 ; (II) LETTER FROM ULC FOR REDEVELOPMENT OF PROPERTY DATED APRIL 26, 1995. OT HER PERMISSIONS WERE ALSO OBTAINED DURING THE FINANCIAL YEAR ENDING MARCH 31, 1996 RELEVANT TO ASSESSMENT YEAR 1996-97. BY MARCH, 31, 1996, FLORE AT HAD PAID ALMOST THE ENTIRE CONSIDERATION EXPECT FOR A SMALL SUM OF RS. 9,98,000/-. HOWEVER, THE COMMENCEMENT CERTIFICATE PERMITTING CONSTRUCTION OF THE BUILDING WAS ISSUED ON NOVEMBER 15, 1996. THE POWER OF ATTORNEY WAS EX ECUTED ON MARCH 12, 1999. THE QUESTION AROSE WHETHER LIABILITY OF THE ASSESSEE FOR CAPITAL GAIN AROSE IN THE ASSESSMENT YEAR 1996-97 OR 1999-2000. THE OBSERVATION OF THE COURT HAS BEEN SUMMARIZED IN HEAD NOTE AS UNDER:- CLAUSES (V) AND (VI) WERE INTRODUCED IN SECTION 2( 47) OF THE INCOME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1988. THEY PROVIDE THAT TRANSFER INCLUDES (I) ANY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN /RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, AND (II) ANY TRANSA CTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING OR ENAB LING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY. THEREFORE, IN THESE TWO CASES C APITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE 5 GENERAL LAW. UNDER SECTION 2(47)(V) ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION TO BE TAKEN OVER OR RETAINED IN PART PER FORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSF ER OF PROPERTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). IN ORDER TO ATTRACT SECTION 53A, THE FOLLOWING CONDITIONS NEED TO BE FULFILLED. THERE SH OULD BE A CONTRACT FOR CONSIDERATION ; IT SHOULD BE IN WRITING ; IT SHOULD BE SIGNED BY THE TRANSFEROR ; IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY ; THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF THE PROPERTY ; LASTLY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM HIS PART OF THE CONTRACT. EV EN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE C OULD FALL UNDER SECTION 2(47)(V). SECTION 2(47)(V) WAS INTRODUCED IN THE AC T FROM THE ASSESSMENT YEAR 1988-89 BECAUSE PRIOR THERETO, IN MOST CASES, IT WA S ARGUED ON BEHALF OF THE ASSESSEE THAT NO TRANSFER TOOK PLACE TILL EXECUTION OF THE CONVEYANCE. ASSESSEES USED TO ENTER INTO AGREEMENTS FOR DEVELOP ING PROPERTIES WITH BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUILDER S, THEY USED TO CONFER PRIVILEGES OF OWNERSHIP WITHOUT EXECUTING CONVEYANC E AND TO PLUG THAT LOOPHOLE, SECTION 2(47)(V) CAME TO BE INTRODUCED IN THE ACT. . HELD, THAT SECTION 2(47)(V) READ WITH SECTION 45 I NDICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSAC TIONS WERE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT E FFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS CASE, THE TEST HAD NOT BEE N APPLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT TEST HAD NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QUESTION, READ AS A WHOLE, SH OWED THAT IT WAS A DEVELOPMENT AGREEMENT. ONCE UNDER CLAUSE 8 OF THE A GREEMENT A LIMITED POWER OF ATTORNEY WAS INTENDED TO BE GIVEN TO THE DEVELOP ER TO DEAL WITH THE PROPERTY, THEN THE DATE OF THE CONTRACT, VIZ., AUGU ST 18, 1994, WOULD BE THE RELEVANT DATE TO DECIDE THE DATE OF TRANSFER UNDER SECTION 2(47)(V) AND, IN WHICH EVENT, THE QUESTION OF SUBSTANTIAL PERFORMANC E OF THE CONTRACT THEREAFTER WOULD NOT ARISE 34. THE HON'BLE COURT REFERRED TO CLAUSES (V) & (VI) OF SECTION 2(47) AND MADE THE FOLLOWING OBSERVATIONS AT PAGE 499 OF THE REPORT: .. THE ABOVE TWO CLAUSES WERE INTRODUCED WITH EF FECT FROM APRIL 1,1988. THEY PROVIDE THAT TRANSFER INCLUDES (I) ANY TRANS ACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, AND (I I) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFER RING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY (SEE SECTION 26 9UA(D)). THEREFORE, IN THESE TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN T HE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW (SE E KANGA AND PALKHIVALAS LAW AND PRACTICE OF INCOME-TAX-VIII EDITION, PAGE 7 66). THIS TEST IS IMPORTANT TO DECIDE THE YEAR OF CHARGEABILITY OF THE CAPITAL GAINS. 35 THE ABOVE OBSERVATIONS WERE MADE ON THE BASIS OF OPINION EXPRESSED BY LD. AUTHOR IN THE COMMENTARY THE LAW AND PRACTICE OF INCOME TAX BY KANGA AND PALKHIVALA EIGHTH EDITION AT PAGE 766. RELEVANT OBSERVATIONS READ AS UNDER: CLS. (V) AND (VI) OF S. 2(47), INSERTED BY THE FIN ANCE ACT 1987 WITH EFFECT FROM 1 ST APRIL 1988, PROVIDE THAT TRANSFER INCLUDES (A) ANY TRANSACTION WHICH INVOL VES THE ALLOWING OF THE POSSESSION OF AN IMMOVABLE PROPERTY (S. 269UA(D)) TO BE TAKEN OR RETAINED IN PART PERFO RMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN S .53A OF THE TRANSFER OF PROPERTY ACT 1882, AND (B) ANY TRANSACT ION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMM OVABLE PROPERTY (S. 269UA(D)). THEREFORE IN THESE T WO CASES CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TR ANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UND ER GENERAL LAW. 36 FROM THE ABOVE, IT IS CLEAR THAT COURT WAS OF TH E VIEW THAT IN CASE ANY TRANSACTION COVERED BY CLAUSE (V) AND (VI) TO SECTI ON 2(47) THE LIABILITY FOR CAPITOL GAIN WOULD ARISE ON THE DATE WHEN SUCH TRAN SACTIONS ARE ENTERED INTO. IN THE JUDGMENT AT SOME OTHER PLACES, THE SIMILAR O BSERVATIONS HAVE BEEN MADE. HOWEVER, DESPITE THIS OBSERVATION THE CASE W AS DECIDED IN FAVOUR OF THE ASSESSEE. THE REASON FOR THE SAME HAVE BEEN G IVEN IN THE JUDGMENT ITSELF. FIRSTLY IT IS OBSERVE D THAT PROVISION OF SECTION 2(47)(V) OF THE ACT WERE NOT INVOKED BY THE REVENUE ITSELF. THIS BECOMES CL EAR FROM THE FOLLOWING PARA: IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABL E LICENCE. IN THIS CONNECTION, THE JUDGMENT OF THE HON'BLE SUPREM E COURT WERE CITED ON BEHALF OF THE ASSESSEE, BUT A LL THOSE JUDGMENT WERE PRIOR TO INTRODUCTION OF THE CONCEPT OF DEEMED TRANSFER U/S 2(47)(V). IN THIS MATTER, T HE AGREEMENT IN QUESTION IS A DEVELOPMENT AGREEMENT. S UCH DEVELOPMENT AGREEMENTS DO NOT CONSTITUTE TRANSF ER IN GENERAL LAW. THEY ARE SPREAD OVER A PERIOD OF TI ME. THEY CONTEMPLATE VARIOUS STAGES. THE BOMBAY HIG H COURT IN VARIOUS JUDGMENTS HAS TAKEN THE VIEW IN SE VERAL MATTERS THAT THE OBJECT OF ENTERING INTO A DE VELOPMENT AGREEMENT IS TO ENABLE A PROFESSIONAL BUILDER / CON TRACTOR TO MAKE PROFITS BY COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE PROFES SIONAL CONTRACTORS WAS ONLY TO MAKE PROFITS BY COMP LETING THE BUILDING AND, THEREFORE, NO INTEREST IN THE LAND ST ANDS CREATED IN THEIR FAVOUR UNDER SUCH AGREEMENTS. THAT SUCH AGREEMENTS ARE ONLY A MODE OF REMUNERATING THE BUIL DER FOR HIS SERVICES OF CONSTRUCTING THE BUILDING ( SEE GURUDEV DEVELOPERS V. KURLA KONKAN NIWAS CO-OPERATI VE HOUSING SOCIETY [2003] 3 MAH LJ 131). IT IS PREC ISELY FOR THIS REASON THAT THE LEGISLATURE HAS INTRODUCED SECTION 2(47)(V) READ WITH SECTION 45 WHICH INDICA TES THAT CAPITAL GAINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GEN ERAL LAW. IN THIS CASE THAT TEST HAS NOT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAS BEEN GIVEN WHY THAT TEST HAS NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QUESTION, READ AS A WHOLE, SHOWS THAT IT IS A DEVELOPMENT AGREEMENT. THERE IS A DIFFERENC E BETWEEN THE CONTRACT ON THE ONE HAND AND THE PERFOR MANCE ON THE OTHER HAND. IN THIS CASE, THE TRIBUNAL AS WELL AS THE DEPARTMENT HAVE COME TO THE CONCLUSI ON THAT THE TRANSFER TOOK PLACE DURING THE ACCOUNTI NG YEAR 6 ENDING MARCH 31,1996, AS SUBSTANTIAL PAYMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTANTIAL PERMISSIO NS WERE OBTAINED. IN SUCH CASES OF DEVELOPMENT AGREEME NTS, ONE CANNOT GO BY SUBSTANTIAL PERFORMANCE OF A CONTRACT. IN SUCH CASES, THE YEAR OF CHARGEABILITY IS THE YE AR IN WHICH THE CONTRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2 (47)(V) OF THE ACT. SECONDLY IT IS MENTIONED IN THE ORDER OF THE COURT THAT LAW WAS NOT VERY CLEAR ON THIS POINT AND SIN CE THE ASSESSEE HAS ADMITTED AND PAID CAPITAL GAIN IN THE ASSESSMENT YEAR 1999-2000, THEREFORE, TAX WAS HELD TO BE CHARGEABLE IN ASSESSMENT YEAR 1999-2000. THIRDLY CERTAIN SHORTCOMINGS WERE ALSO NOTED IN TH E ORDER OF THE TRIBUNAL WHERE CERTAIN DOCUMENTS WERE MENTIONED TO HAVE BEEN EXECU TED BEFORE MARCH 31, 1996 E.G. THE FOLLOWING OBSERVATION OF THE TRIBUNAL WAS NOT FOUND CORRECT AS SOMETHING IS DONE ON IST APRIL, 1997 THEN THE SAME CANNOT FALL IN THE YEAR ENDING 31.3.1996. FROM THE DATES IT IS EVIDENT THAT FROM THE VERY NE XT DAY, I.E., APRIL 1, 1997, FROM THE END OF THE FINANCIAL YEAR ENDING ON MARCH 31, 1996, THE BUILDER WAS USING THE WELL WATER AGAINST PAYMENT OF RELEVANT CH ARGES TO THE ASSESSEE. 37 THUS IT IS VERY CLEAR THAT IN CASES WHERE AN ARR ANGEMENT HAD BEEN ENTERED INTO BY AN ASSESSEE IN TERMS OF CLAUSE (V) OF SECTION 2(47) WHICH HAS EFFECT OF HANDING OVER THE POSSESSION THEN THE TRAN SFER IS SAID TO HAVE BEEN TAKEN PLACE ON THE DATE OF ENTERING INTO SUCH ARRAN GEMENT. 38. WE DO NOT FIND ANY FORCE IN THE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT JUDGMENT HAS TO BE READ IN THE CONTE XT OF THE DECISION MADE IN SUCH JUDGMENT. IN FACT, IT IS WELL SETTLED THAT DO CTRINE OF PRECEDENT WHICH MEANS WHAT NEEDS TO BE FOLLOWED LATER ON PARTICULAR LY BY SUBORDINATE TRIBUNALS AND COURTS IS THE RATIO OF A PARTICULAR JUDGMENT GI VEN BY THE HIGHER COURT OR FORUM. FURTHER, THERE IS NO FORCE IN THE CONTENTIO N THAT DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA) DOES NOT SHOW THAT THE DATE OF AGREEMEN T ITSELF CONSTITUTE THE TRANSFER. AGAIN THERE IS NO FORCE EVEN IN THE CONT ENTION THAT IN THAT CASE IT WAS ULTIMATELY DECIDED THAT CAPITAL GAIN TAXES IS C HARGEABLE IN ASSESSMENT YEAR 1999-2000 BECAUSE OF THE REASONS GIVEN IN ABOV E NOTED PARAS PARTICULARLY BECAUSE THE REVENUE ITSELF NEVER INVOK ED THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT AND HELD IT TO BE TAXABLE IN AS SESSMENT YEAR 1996-97. NO DOUBT IN THAT CASE ULTIMATELY IT WAS HELD THAT CAPI TAL GAIN WAS IN ASSESSMENT YEAR 1999-2000 BUT COURT HAD MADE IT VERY CLEAR THA T THIS IS FIRST TIME THAT LAW IS BEING LAID DOWN AND GUIDELINES ARE BEING ISSUED WHICH MEANS THAT THERE WAS A CONFUSION EARLIER. CLAUSES (V) & (VI) TO SECTION 2(47) WERE INTRODUCED IN THE YEAR ONLY IN 1998. PERHAPS COURT TOOK A LENIENT VIE W BECAUSE OF THESE REASONS AND HELD THAT CAPITAL GAIN WAS TAXABLE IN ASSESSMEN T YEAR 1999-2000. IT IS QUITE CLEAR THAT RATIO OF THE ABOVE DECISION IS THA T IN CASE OF ANY ARRANGEMENTS OR TRANSACTIONS WHEREBY THE OTHER PART Y BECOMES ENTITLED TO ENJOY THE PROPERTY THEN THAT DATE OF SUCH TRANSACTI ON ITSELF NEEDS TO BE CONSTRUED AS THE DATE OF TRANSFER. 39. THE SECOND RELEVANT DECISION CITED BY THE REVEN UE IS BY AUTHORITY FOR ADVANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBI R SINGH SARKARIA (SUPRA). IN THAT CASE THE ASSESSEE WAS CO-OWNER OF AGRICULTU RAL LAND MEASURING ABOUT 27.7 ACRES AND HIS SHARE WAS 4/9. THE CO-OWNER DEC IDED TO DEVELOP THE LAND BY CONSTRUCTING RESIDENTIAL COMPLEX THROUGH DEVELOP ER AND ENTERED INTO A COLLABORATION AGREEMENT ON 8.6.2005 WITH M/S SANTUR DEVELOPER PVT LTD, NEW DELHI (HEREIN AFTER CALLED DEVELOPER). ACCORDING TO THE TERMS OF AGREEMENT, THE DEVELOPER SHOULD OBTAIN A LETTER OF INTENT FROM THE CONCERNED GOVERNMENT DEPARTMENT AND OBTAIN OTHER PERMISSIONS AND SANCTIO NS FOR DEVELOPING THE LAND AT ITS OWN RISK AND COST. THE DEVELOPER WAS TO TAK E 84% OF THE BUILT UP AREA AND BALANCE 16% WOULD BELONG TO ASSESSEE AND OTHER CO-OWNER. THE CONSIDERATION FOR THE AGREEMENT WAS TAKEN AS THE BU ILT UP AREA TO BE HANDED OVER TO THE OWNERS FREE OF COST. THE OWNERS WERE E NTITLED TO VISIT THE SITE IN ORDER TO REVIEW THE PROGRESS OF THE PROJECT. IT WA S CLARIFIED BY CLAUSE 18 THAT OWNERSHIP WOULD REMAIN EXCLUSIVELY WITH THE OWNERS TILL IT VESTS WITH BOTH THE PARTIES AS PER THEIR RESPECTIVE SHARES ON THE COMPL ETION OF THE PROJECT. THE OTHER CLAUSES AND THE STEPS IN THE AGREEMENT WERE T HAT A SUM OF RS. 1 CRORE TOWARDS PAYMENT OF EARNEST MONEY AT THE TIME OF ENT ERING INTO AGREEMENT; A SPECIAL POWER OF ATTORNEY WAS TO BE EXECUTED IN FAV OUR OF THE DEVELOPER TO ENABLE TO DEAL WITH THE STATUTORY AUTHORITIES ETC. FOR OBTAINING NECESSARY APPROVALS / SANCTIONS; LETTER OF INTENT WAS TO BE OBTAINED NOT LATER THAN MARCH 8, 2006 AND IN CASE OF A FAILURE TO DO SO, TH E AGREEMENT SHALL STAND TERMINATED. LETTER OF INTENT IS BASICALLY A LICENS E GRANTED BY THE DIRECTOR OF TOWN PLANTING TO DEVELOPER OF LAND FOR THE PURPOSE OF CONSTRUCTING RESIDENTIAL FLATS SUBJECT TO PAYMENT OF CERTAIN CHARGES AND COM PLIANCE OF OTHER CONDITIONS. IT WAS FURTHER STATED IN THE AGREEMENT THAT ON FULFILLMENT OF THE REQUIREMENT IN THE LETTER OF INTENT, OWNERS WILL HA VE TO EXECUTE IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPE R AUTHORIZING THE DEVELOPER TO TOOK AND SELL THE DWELLING UNITS OUT OF DEVELOPE RS SHARE AND COLLECT THE MONEY FOR THE SAME. HOWEVER, FINALLY SALE DEEDS COU LD BE EXECUTED ONLY AFTER THE OWNER RECEIVED THEIR SHARE OF CONSTRUCTED AREA. THREE MONTHS LATER, A SUPPLEMENTARY AGREEMENT WAS ENTERED ON SEPTEMBER 15 , 2005 BETWEEN THE ASSESSEE AND OTHER CO-OWNERS AND DEVELOPERS THROUGH WHICH IT WAS AGREED THAT OWNERS WILL SELL THEIR 16% SHARE IN THE BUILT UP AREA TO THE DEVELOPER OR ITS NOMINEE FOR CONSIDERATION OF RS. 42 CRORES. A S UM OF RS. 2 CRORES WAS RECEIVED. THIS COLLABORATION AGREEMENT AND BALANCE OF RS. 40 CRORES WAS 7 PAYABLE BY THE DEVELOPER TO THE OWNERS IN SIX INSTA LLMENTS FROM MARCH 06, 2008. THE INSTALLMENTS COULD BE EXTENDED SUBJECT T O PAYMENT OF INTEREST AND FURTHER SUBJECT TO MAXIMUM EXTENSION OF THREE MONTH S. THERE WERE VARIOUS OTHER CLAUSES WHICH ARE NOT RELEVANT FOR OUR PURPOS ES. THE QUESTION AROSE WHETHER CAPITAL GAIN ACCRUE / ARISE TO THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 OR DURI NG FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09. 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFER RING TO THE PROVISIONS OF SECTION 45 AND OBSERVED AS UNDER:- .THE SECTION CAN BE ANALYSED THUS : (A) TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME OF THE ASSESSEE/ TRANSFEROR (D) SUCH INCOME SHALL BE DEEMED TO BE THE INCOME OF THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER HAD T AKEN PLACE. TWO ASPECTS MAY BE NOTED AT THIS JUNCTURE. FIRSTLY , THE EXPRESSION USED IS ARISING WHICH IS NOT TO BE EQUATED WITH THE EXPRESSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSIO N ACCRUE ARE USED IN THE INCOME-TAX ACT EITHER COL LECTIVELY OR SEPARATELY ACCORDING TO THE CONTEXT AN D NATURE OF THE CHARGING PROVISION. THE SECOND POINT WHICH DESE RVES NOTICE IS THAT BY A DEEMING PROVISION, THE PR OFITS OR GAINS THAT HAVE ARISEN WOULD BE TREATED AS THE INC OME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOO K PLACE. THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPI TAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREV IOUS YEAR IN WHICH THE TRANSFER WAS EFFECTED OR DEEMED TO HA VE TAKEN PLACE. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AND LEADING TEXT BOOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL POSITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOU S YEAR IN WHICH THE TRANSFER TOOK PLACE. SINCE THIS IS A ST ATUTORY FICTION, THE ACTUAL YEAR IN WHICH THE SALE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREVIOUS TO THE PREVIOUS Y EAR OF TRANSFER, IS BESIDE THE POINT. THE ENTIRETY OF THE SUM OR SUMS RECEIVED IN ANY EARLIER YEAR OR YEARS WOULD BE REGARDED AS THE CAPITAL GAINS ARISING IN THE PREVI OUS YEAR OF TRANSFER. . . . . IN THE WORDS OF SECTION 45, THE CAPITAL GAI NS ARISING FROM THE TRANSFER 'SHALL BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE'. SO, THE PA YMENTS OF CONSIDERATION STIPULATED TO BE PAID IN F UTURE WOULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 41. THEREAFTER, THE AUTHORITY REFERRED TO SECTION 2(47) AND OBJECTS OF THE INTRODUCTION OF CLAUSES (V) & (VI) AND ALSO REFERRE D TO PARAS 11.1 & 11.2 OF THE BOARD CIRCULAR NO. 495 (WHICH WE HAVE ALREADY DISCU SSED EARLIER). THE HON'BLE AUTHORITY HAS DISCUSSED VARIOUS IMPLICATION S OF CLAUSE (V) OF SECTION 2(47) AND ALSO IMPLICATION OF SECTION 53A OF THE TR ANSFER OF PROPERTY ACT AS WELL AS OBSERVATIONS OF HON'BLE BOMBAY HIGH COURT I N THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA). THE AUTHORITY OB SERVED THAT TO UNDERSTAND THIS PROVISION PROPERLY MEANING OF POSSESSION HAS TO BE UNDERSTOOD PROPERLY AND WENT ON TO DISCUSS THE MEANING OF TERM POSSESS ION, AND HOW THE SAME IS TO BE UNDERSTOOD IN THE CONTEXT OF CLAUSE (V). THE SE ARE VERY IMPORTANT OBSERVATIONS AND HAVE BEEN DISCUSSED IN MOST ELUCID ATED FASHION. THESE OBSERVATIONS WILL ANSWER MANY OF THE QUESTIONS RAIS ED BEFORE US AND, THEREFORE, WE ARE EXTRACTING THESE OBSERVATIONS AS UNDER:- MEANING OF POSSESSION AND HOW SHOULD IT BE UNDER STOOD IN THE CONTEXT OF CLAUSE (V) THE NEXT QUESTION IS, IN WHAT SENSE WE HAVE TO UND ERSTAND THE TERM POSSESSION IN THE CONTEXT OF CLAUSE (V) OF SECTION 2(47). SHOULD IT ONLY MEAN T HE RIGHT TO EXCLUSIVE POSSESSIONWHICH THE TRANSFER EE CAN MAINTAIN IN HIS OWN RIGHT TO THE EXCLUSION OF EVER YONE INCLUDING THE TRANSFEROR FROM WHOM HE DERIVED THE POSSESSION ? SUCH A CRITERION WILL BE SATISFIED ONL Y AFTER THE ENTIRE SALE CONSIDERATION IS PAID AND THE TRANSFEROR HAS FORFEITED HIS RIGHT TO EXERCISE ACTS OF POSSES SION OVER THE LAND OR TO RESUME POSSESSION. IN OUR VIEW, THERE IS NO WARRANT TO PLACE SUCH A RESTRICTED INTERPRETA TION ON THE WORD POSSESSION OCCURRING IN CLAUSE ( V) OF SECTION 2(47). POSSESSION IS AN ABSTRACT CONCEPT. IT HAS D IFFERENT SHADES OF MEANING. IT IS VARIOUSLY DESCRI BED AS A POLYMORPHOUS TERM HAVING DIFFERENT MEANINGS IN DIF FERENT CONTEXTS (PER R. S. SARKARIA J. IN SUPERINT ENDENT AND REMEMBRANCE OF LEGAL AFFAIRS, W. B. V. ANIL KUM AR BHUNJA [1979] 4 SCC 274 AND AS A WORD OF OPEN TEXTURE (SEE SALMOND ON JURISPRUDENCE, PARAGRAPH 5 1, TWELFTH EDITION, INDIAN REPRINT). SALMOND OBSER VED : TO LOOK FOR A DEFINITION THAT WILL SUMMARIZE THE MEAN INGS OF THE TERM POSSESSION IN ORDINARY LANGUAGE , IN ALL AREAS OF LAW AND IN ALL LEGAL SYSTEMS, IS TO ASK FO R THE IMPOSSIBLE. IN THE ABOVE CASE OF ANIL KUMAR BHUNJA [1979] 4 SCC 274, SARKARIA J. SPEAKING FOR A THREE -JUDGE BENCH ALSO REFERRED TO THE COMMENTS OF DIAS AND HUGHES IN THEIR BOOK ON JURISPRUDENCE THAT IF A T OPIC EVER SUFFERED TOO MUCH THEORIZING IT IS THAT O F POSSESSION. MUCH OF THE DIFFICULTY IS CAUSED BY THE FACT THAT POSSESSION IS NOT A PURE LEGAL CONCE PT, AS POINTED OUT BY SALMOND. THE LEARNED JUDGE THEN EXPLAINED TH E CONNOTATION OF THE EXPRESSION POSSESSION BY RE FERRING TO THE WELL KNOWN TREATISES ON JURISPRUDENCE (PAGE 278) : 8 POSSESSION, IMPLIES A RIGHT AND A FACT : THE RIG HT TO ENJOY ANNEXED TO THE RIGHT TO PROPERTY AND T HE FACT OF THE REAL INTENTION. IT INVOLVES POWER OF CONTROL AND I NTENT TO CONTROL, (SEE DIAS AND HUGHES) 14 . . . . 15. WHILE RECOGNIZING THAT POSSESSION IS NOT A PU RELY LEGAL CONCEPT BUT ALSO A MATTER OF FACT, SALM OND (12TH ED., 52) DESCRIBES POSSESSION, IN FACT, AS A RELAT IONSHIP BETWEEN A PERSON AND A THING. ACCORDING TO THE LEARNED AUTHOR, THE TEST FOR DETERMINING WHETHER A PERSON IS IN POSSESSION OF ANYTHING IS WHETHER HE IS IN GENERAL CONTROL OF IT. IN SALMONDS JURISPRUDENCE, AT PARAGRAPH 54, WE FI ND AN ILLUMINATING DISCUSSION ON IMMEDIATE AND MEDIATE POSSESSION. THE LEARNED AUTHOR STATES I N LAW ONE PERSON MAY POSSESS A THING FOR AND ON ACC OUNT OF SOME ONE ELSE. IN SUCH A CASE THE LATTER IS IN POS SESSION BY THE AGENCY OF HIM WHO SO HOLDS THE THIN G ON HIS BEHALF. THE POSSESSION THUS HELD BY ONE MAN THROUG H ANOTHER MAY BE TERMED MEDIATE, WHILE THAT WHICH I S ACQUIRED OR RETAINED DIRECTLY OR PERSONALLY MAY BE DISTINGUISHED AS IMMEDIATE OR DIRECT. SALMOND MAKES REFERENCE TO THREE TYPES OF MEDIATE POSSESSION. IN ALL CASES OF MEDIATE POSSESSION, TWO PERSONS ARE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AN A LLIED CONCEPT OF CONCURRENT POSSESSION HAS ALSO BE EN EXPLAINED IN PARAGRAPH 55 OF SALMONDS JURISPRUDENC E IN THE FOLLOWING WORDS : IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS C OULD NOT BE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AS A GENERAL PROPOSITION THIS IS TRUE : FOR EXCLUSI VENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERS E CLAIMS OF EXCLUSIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT AD VERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCURRENT REALIZATION. HENCE, THERE ARE SEVERAL POSSIBLE CASES OF DUPLICATE POSSESSION. 1. MEDIATE AND IMMEDIATE POSSESSION CO-EXIST IN R ESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2. TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON, JUST AS THEY MAY OWE IT IN COMMON . ON A FAIR AND REASONABLE INTERPRETATION AND ON ADO PTING THE PRINCIPLE OF PURPOSIVE CONSTRUCTION, IT MUST BE HELD THAT POSSESSION CONTEMPLATED BY CLAUS E (V) NEED NOT NECESSARILY BE SOLE AND EXCLUSIVE POSSESSION. SO LONG AS THE TRANSFEREE IS, BY VIRTU E OF THE POSSESSION GIVEN, ENABLED TO EXERCISE GEN ERAL CONTROL OVER THE PROPERTY AND TO MAKE USE OF IT FOR THE INT ENDED PURPOSE, THE MERE FACT THAT THE OWNER HAS ALS O THE RIGHT TO ENTER THE PROPERTY TO OVERSEE THE DEVELOPMENT W ORK OR TO ENSURE PERFORMANCE OF THE TERMS OF AGREE MENT DOES NOT INTRODUCE ANY INCOMPATIBILITY. THE CONCURR ENT POSSESSION OF THE OWNER WHO CAN EXERCISE POSSES SORY RIGHTS TO A LIMITED EXTENT AND FOR A LIMITED PURPOS E AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN VERY WELL BE RECONCILED . CLAUSE (V) OF SECTION 2(47) WILL HAVE ITS FULL PL AY EVEN IN SUCH A SITUATION. THERE IS NO WARRANT TO POSTPONE T HE OPERATION OF CLAUSE (V) AND THE RESULTANT ACCRUA L OF CAPITAL GAIN TO A POINT OF TIME WHEN THE CONCURRENT POSSESS ION WILL BECOME EXCLUSIVE POSSESSION OF DEVELOPER/TRANSFEREE AFTER HE PAYS FULL CONSIDERATI ON. FURTHER, IF POSSESSION REFERRED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE POSSESSION OF THE TRANSFEREE/DEVELOPER, THEN, THE VERY PURPOSE OF THE AMENDMENT EXPANDING THE DEFINITION OF TRANSFER FOR THE PURPOSE OF CAPITAL GAINS MAY BE DEFEATED. THE REASO N IS THIS: THE OWNER OF THE PROPERTY CAN VERY WELL CONTEND, AS IS BEING CONTENDED IN THE PRESENT CASE, THAT THE DEVELOPER WILL HAVE SUCH EXCLUSIVE POSSESSION IN H IS OWN RIGHT ONLY AFTER THE ENTIRE AMOUNT IS PAID TO THE O WNER TO THE LAST PIE. THERE IS THEN A POSSIBILITY O F STAGGERING THE LAST INSTALMENT OF A SMALL AMOUNT TO A DISTANT DATE , MAY BE, WHEN THE ENTIRE BUILDING COMPLEX GETS REA DY. EVEN IF SOME AMOUNT, SAY 10 PER CENT., REMAINS TO BE PAID A ND THE DEVELOPER/TRANSFEREE FAILS TO PAY, LEADING T O A DISPUTE BETWEEN THE PARTIES, THE RIGHT TO EXCLUSIVE AND INDEFEASIBLE POSSESSION MAY BE IN JEOPARDY. I N THIS STATE OF AFFAIRS, THE TRANSACTION WITHIN THE MEANING OF C LAUSE (V) CANNOT BE SAID TO HAVE BEEN EFFECTED AND THE LIABILITY TO PAY CAPITAL GAINS MAY BE INDEFINITELY POSTPONED. TRUE, IT MAY NOT BE PROFITABLE FOR THE DEVELOPER TO ALLOW THIS SITUATION TO LINGER FOR LONG AS THE PROCESS OF TRAN SFER OF FLATS TO THE PROSPECTIVE PURCHASERS WILL GE T DELAYED. AT THE SAME TIME, THE OTHER SIDE OF THE PICTURE CANNO T BE OVER-LOOKED. THERE IS A POSSIBILITY OF THE OWN ER WITH THE CONNIVANCE OF THE TRANSFEREE POSTPONING THE PAYMENT OF CAPITAL GAINS TAX ON THE OSTENSIBLE GROUND THA T THE ENTIRE CONSIDERATION HAS NOT BEEN RECEIVED AND SOM E BALANCE IS LEFT. THE MISCHIEF SOUGHT TO BE REMEDI ED, WILL THEN PERPETUATE. WE ARE, THEREFORE OF THE VIEW THA T POSSESSION GIVEN TO THE DEVELOPERS NEED NOT RIPE N ITSELF INTO EXCLUSIVE POSSESSION ON PAYMENT OF ALL THE IN STALMENTS IN ENTIRETY FOR THE PURPOSE OF DETERMININ G THE DATE OF TRANSFER. WHILE ON THE POINT OF POSSESSION, WE WOULD LIKE TO CLARIFY ONE MORE ASPECT. WHAT IS SPOKEN TO IN CLAUSE (V) OF SECTION 2(47) IS THE TRANSACTION WH ICH INVOLVES ALLOWING THE POSSESSION TO BE TAKEN. B Y MEANS OF SUCH TRANSACTION, A TRANSFEREE LIKE A DEVELOPER IS ALLOWED TO UNDERTAKE DEVELOPMENT WORK ON THE LAND B Y ASSUMING GENERAL CONTROL OVER THE PROPERTY IN PART PERFORMANCE OF THE CONTRACT. THE DATE OF THAT TRAN SACTION DETERMINES THE DATE OF TRANSFER. THE ACTUAL DATE O F TAKING PHYSICAL POSSESSION OR THE INSTANCES OF PO SSESSORY ACTS EXERCISED IS NOT VERY RELEVANT. THE ASCERTAINM ENT OF SUCH DATE, IF CALLED FOR, LEADS TO COMPLICAT ED INQUIRIES, WHICH MAY FRUSTRATE THE OBJECTIVE OF THE LEGISLATIV E PROVISION. IT IS ENOUGH IF THE TRANSFEREE HAS, BY VIRTUE OF THAT TRANSACTION, A RIGHT TO ENTER UPON AND EXERCISE ACT S OF POSSESSION EFFECTIVELY PURSUANT TO THE COVENAN TS IN THE CONTRACT. THAT TANTAMOUNTS TO LEGAL POSSESSION. WE ARE REFERRING TO THIS ASPECT BECAUSE THE AUTHORIZ ED REPRESENTATIVE HAS SUBMITTED WHEN HE APPEARED BEFO RE US IN THE LAST WEEK OF MAY, 2007, THAT EVEN BY T HAT DATE THE DEVELOPMENT WORK COULD NOT BE COMMENCED FO R WANT OF CERTAIN APPROVALS, AND THEREFORE, THE DEVELOPER WAS NOT WILLING TO TAKE POSSESSION OF TH E LAND. SUCH AN UNSUBSTANTIATED STATEMENT WHICH I S NOT FOUND IN THE ORIGINAL APPLICATION OR EVEN WRITTEN SUBMISSIONS FILED EARLIER NEED NOT BE PROBED INTO ESPECIALLY WHEN IT IS NOT HIS CASE THAT THE DEVELOPER WAS NOT ALLOWED TO TAKE POSSESSION IN TERMS OF THE AGREEME NT. 42. AFTER THE ABOVE DISCUSSION, THE AUTHORITY DISCU SSED THE FACTS OF THE CASE BEFORE IT. IT WAS OBSERVED THAT PARAGRAPH 18 O F THE COLLABORATION AGREEMENT PROVIDES THAT ON ISSUANCE OF LETTER OF IN TENT, THE OWNERS WILL ALLOW AND PERMIT THE DEVELOPER TO ENTER UPON AND SURVEY T HE LAND, ERECT SITE / SALES OFFICE, CARRY OUT THE SITE DEVELOPMENT WORK AND DO ACTIVITIES FOR ADVANCING & SALE PROMOTION, CONSTRUCTION ETC. THE AUTHORITY FU RTHER OBSERVED THAT IF THIS CLAUSE IS READ IN ISOLATION THIS WOULD SUGGEST ON P ASSING OF POSSESSION BUT 9 ACCORDING TO AUTHORITY THE OTHER FACTORS ARE TO BE CONSIDERED. CLAUSE 15 PROVIDED THAT ON FULFILLMENT OF THE REQUIREMENTS LA ID DOWN IN THE LETTER OF INTENT WHICH IS PROVISIONAL LICENSE, THE OWNERS SH OULD EXECUTE AN IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPE R ALLOWING INTER ALIA TO BOOK AND SELL THE DWELLING UNIT FAILING UNDER THEIR SH ARE. THIS WAS POSSIBLE ONLY AFTER DEPOSIT OF REQUISITE CHARGES ETC. AND PERHAPS THERE WAS LITIGATION REGARDING OWNERSHIP OF LAND WHICH HAS ALSO TO BE WI THDRAWN. THE AUTHORITY HAS DISCUSSED THE SIGNIFICANCE OF GENERAL POWER OF ATTORNEY AND THE TERMS OF THE GENERAL POWER OF ATTORNEY AT PARA 33 AND THE R ELEVANT PORTION OF THE SAME IS AS UNDER:- A COPY OF THE IRREVOCABLE GPA EXECUTED IN TERMS O F PARAGRAPH 15 OF THE AGREEMENT HAS BEEN FURNISHED BY THE APPLICANT. IT AUTHORIZES THE DEVE LOPER : (I) TO ENTER UPON AND SURVEY THE LAND, PREPARE THE LAYOUT PLAN, APPLY FOR RENEWAL/EXTENSION OF LICENC E, SUBMIT THE BUILDING PLANS FOR SANCTION OF THE AP PROPRIATE AUTHORITY AND TO CARRY OUT THE WORK OF DEVELOPMENT OF A MULTI-STORIED RESIDENTIAL COMPLEX, (II) TO MA NAGE AND CONTROL, LOOK AFTER AND SUPERVISE THE PROPERTY IN ANY MANNER AS THE ATTORNEY DEEMS FIT AND PROPER, ( III) TO OBTAIN WATER, SEWAGE DISPOSAL AND ELECTRICITY CONNECTIONS. THE DEVELOPER IS ALSO AUTHORIZED TO BORROW MONEY FOR MEETING THE COST OF CONSTRUCTION ON THE SECURITY AN D MORTGAGE OF LAND FALLING TO THE DEVELOPERS SHARE . THE OTHER CLAUSES IN THE GPA ARE NOT RELEVANT FOR OUR PURPOSE . THE GPA UNEQUIVOCALLY GRANTS TO THE DEVELOPER A BUNDLE OF POSSESSORY RIGHTS. THE ACTS OF MANAGEMENT, CONT ROL AND SUPERVISION OF PROPERTY ARE EXPLICITLY MENT IONED. IT IS FAIRLY CLEAR THAT THE GPA IS NOT A MERE LICENCE TO ENTER THE LAND FOR DOING SOME PRELIMINARY ACTS IN RELATION TO THE DEVELOPMENT WORK. THE POWER OF CONTROL OF THE LAND WHICH IS AN INCIDENCE OF POSSESSION AS EXPLAIN ED SUPRA HAS BEEN CONFERRED ON THE DEVELOPER UNDER THIS GPA. THE DEVELOPER ARMED WITH THE GPA CANNOT BE REGARDE D MERELY AS A LICENSEE OR AN AGENT SUBJECT TO THE CON TROL OF THE OWNERS. HIS POSSESSION CANNOT BE CHARA CTERIZED AS PRECARIOUS OR TENTATIVE IN NATURE. THE FACT THAT THE AGREEMENT DESCRIBES THE GPA AS IRREVOCABLE AND AN EXPRESS DECLARATION TO THAT EFFECT IS FOUND IN THE GPA ITSELF IS NOT WITHOUT SIGNIFICANCE. HAVING REGA RD TO THE SECOND AND SUPPLEMENTAL AGREEMENT BY VIRTUE OF WHIC H THE ENTIRE DEVELOPED PROPERTY INCLUDING THE OWNE RS SHARE HAS BEEN AGREED TO BE SOLD TO THE DEVELOPER OR HIS NOMINEES FOR VALUABLE MONEY CONSIDERATION, T HE DEVELOPER HAS A VITAL STAKE IN THE ENTIRE PROPERTY. AS FAR AS THE QUALITY OF POSSESSION IS CONCERNED, HE IS ON A HIGHER PEDESTAL THAN A DEVELOPER WHO APPORTIONS BU ILT UP AREA WITH THE OWNER. EVEN IF HE IS AN AGENT IN ONE SENSE IN THE COURSE OF DEVELOPING THE LAND, THAT AG ENCY IS COUPLED WITH INTEREST. FOR THESE REASONS, THE PREFIX IRREVOCABLE IS DELIBERATELY CHOSEN. AS DISCUSSED EARLIER, THE OWNER'S LIMITED RIGHT TO ENTER THE LAN D AND OVERSEE THE DEVELOPMENT WORK IS NOT INCOMPATIBLE WITH THE D EVELOPERS RIGHT OF CONTROL OVER THE LAND WHICH HE DERIVES FROM THE GPA. EXCLUSIVE POSSESSION, AS ALREADY POIN TED OUT, IS NOT NECESSARY FOR THE PURPOSE OF SATISF YING THE INGREDIENTS OF CLAUSE (V) OF SECTION 2(47). WE ARE THEREFORE, OF THE VIEW THAT THE IRREVOCABLE GPA EX ECUTED BY THE OWNERS IN FAVOUR OF THE DEVELOPER MUST BE REGAR DED AS A TRANSACTION IN THE EYE OF LAW WHICH ALLOWS POSSESSION TO BE TAKEN IN PART PERFORMANCE OF THE C ONTRACT FOR TRANSFER OF THE PROPERTY IN QUESTION .. 43 THUS, THE ABOVE CLEARLY SHOWS THAT IRREVOCABLE G ENERAL POWER OF ATTORNEY WHICH LEADS TO OVER ALL CONTROL OF THE PR OPERTY IN THE HANDS OF THE DEVELOPER, EVEN IF THAT MEANS NO EXCLUSIVE POSSESSI ON BY THE DEVELOPER WOULD CONSTITUTE TRANSFER. IT CAN BE SAID THAT IT HAS TO BE CONSTRUED AS POSSESSION IN TERMS OF CLAUSE (V) OF SECTION 2(47) OF THE ACT. 44 A QUESTION MAY ARISE THAT WHY THE TRANSFER WAS N OT HELD TO BE TAKEN PLACE IN ASSESSMENT YEAR 2006- 07 WHEN FIRST AGREEMENT WAS ENTERED INTO ON JUNE 8, 2005. THE SUPPLEMENTARY AGREEMENT WAS ALSO ENTERE D INTO ON SEPT 15, 2005 BOTH OF WHICH FALL IN FINANCI AL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07 . THEN WHY TRANSFER WAS NOT CONSTRUED IN ASSESSMENT YEAR 2 006-07 IT WAS BECAUSE THE FIRST AGREEMENT ITSELF CO NTAINED A CONDITION THAT LETTER OF INTENT SHOULD BE PROCU RED NOT LATER THAN MARCH 8, 2006. IN CASE OF FAILU RE TO DO SO THE AGREEMENT SHALL STAND TERMINATED. THEREFORE, OBTA INING THE LETTER OF INTENT WAS THE CRUCIAL FACTOR . IT HAS BEEN EXPLAINED IN THE DECISION THAT THE LETTER OF INTEN T BASICALLY IS A LICENSE ISSUED BY THE DIRECTOR O F TOWN AND COUNTRY PLANNING, HARYANA WHICH GIVES PERMISSION FO R CONSTRUCTION OF THE FLATS. THE OTHER CRUCIAL POI NT WAS EXECUTION OF IRREVOCABLE OF GPA WHICH WAS EXECUTED ON MAY 8, 2006 WHICH ACCORDING TO THE LD. AUTHORITY DEPICTS THE INTENTION OF THE HANDING OVER OF THE PO SSESSION. THEREFORE, IT BECOMES VERY CLEAR THAT I T IS NOT NECESSARY THAT TRANSFER WOULD TAKE PLACE ON THE SIG NING OF DEVELOPMENT AGREEMENT BUT THE SAME HAS TO B E INFERRED ONLY WHEN THE POSSESSION HAS BEEN HANDED O VER BY THE TRANSFEROR TO THE DEVELOPER WHICH CAN BE INFERRED FROM THE DOCUMENTS E.G. POWER OF ATTORNEY. AFTER ABOVE DISCUSSION HON'BLE AUTHORITY HAS SUMMA RIZED THE DECISION IN PARA 41 WHICH IS AS UNDER: THE FOLLOWING IS THE SUMMARY OF CONCLUSIONS: 1. WHERE THE AGREEMENT FOR TRANSFER OF IMMOVABLE PR OPERTY BY ITSELF DOES NOT PROVIDE FOR IMMEDIATE TRA NSFER OF POSSESSION, THE DATE OF ENTERING INTO THE AGREEM ENT CANNOT BE CONSIDERED TO BE THE DATE OF TRANSFER WITHIN THE MEANING OF CLAUSE (V) OF SECTION 2 (47) OF THE INCO ME-TAX ACT. 2. TO ATTRACT CLAUSE (V) OF SECTION 2(47), IT IS NO T NECESSARY THAT THE ENTIRE SALE CONSIDERATION UP T O THE LAST INSTALLMENT SHOULD BE RECEIVED BY THE OWNER. 3. IN THE INSTANT CASE, HAVING REGARD TO THE TERMS OF THE TWO AGREEMENTS AND THE IRREVOCABLE GPA EXECU TED PURSUANT TO THE AGREEMENT, THE EXECUTION OF THE GPA SHALL BE REGARDED AS THE TRANSACTION INVOLVING TH E ALLOWING OF THE POSSESSION OF LAND TO BE TAKEN IN PART PERFORMANCE OF THE CONTRACT AND THEREFORE, THE TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) MUST BE DEEM ED TO HAVE TAKEN PLACE ON THE DATE OF EXECUTION OF SUCH GPA. THE IRREVOCABLE GPA WAS EXECUTED ON MAY 8, 200 6, I.E., DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 AND THE CAPITAL GAINS MUST BE HELD TO HAVE ARISEN DURING THAT YEAR. INCIDENTAL LY, IT MAY BE MENTIONED THAT DURING THE SAID YEAR, I.E., F INANCIAL YEAR 2006-07, A FINAL LICENSE WAS GRANTED AND THE APPLICANT/OWNERS RECEIVED NEARLY 2/3RDS OF THE CONS IDERATION. 45. LEGAL POSITION HAS BEEN DISCUSSED IN ABOVE NOTE D PARAS AND NOW LET US DISCUSS THE FACTS OF THE CASE IN THE LIGHT OF ABOVE NOTED LEGAL POSITION. 46 UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESS EE IS A MEMBER OF PUNJABI COOP HOUSE BUILDING SOCIETY LTD. WHICH HAD 96 MEMBERS (NUMBER OF MEMBERS WERE STATED AS 95 DURING ARGUMENTS BUT CLAU SE 13 OF THE JDA REFERS TO NUMBER OF MEMBERS AS 96). THE SOCIETY WAS OWNING 21.2 ACRES OF LAND IN VILLAGE KANSAL DISTT. MOHALI ADJACENT TO CHANDIGARH . THERE WERE TWO TYPES OF MEMBERS FIRSTLY THE MEMBERS WHO WERE OWNING PLOT OF 500 SQYD AND SECONDLY 10 THE MEMBERS WHO ARE HOLDING PLOT OF 1000 SQYD. SOM EWHERE IN 2006 IT WAS DECIDED TO DEVELOP A GROUP HOUSING COMMERCIAL PROJE CT AND DO DEVELOPMENT AS PER THE APPLICABLE MUNICIPAL BUILDING BYE-LAWS I N FORCE AND ACCORDINGLY A BID WAS INVITED THROUGH ADVERTISEMENT IN THE TRIBUN E DATED 31.5.2006. HASH A DEVELOPER, APPROACHED THE SOCIETY WITH PROPOSAL F OR DEVELOPMENT OF THE PROPERTY. SINCE HASH DID NOT HAVE SUFFICIENT MEANS TO DEVELOP THE PROPERTY, HASH HAD APPROACHED THDC FOR DEVELOPMENT OF THE PRO PERTY BY CONSTRUCTING THE BUILDING AND/OR STRUCTURES TO BE USED FOR INTER ALIA RESIDENTIAL, PUBLIC USE AND COMMERCIAL PURPOSES. THIS PROPOSAL WAS DISCUSS ED BY THE SOCIETY IN ITS EXECUTIVE COMMITTEE MEETING ON 4.1.2007. MINUTES O F THE MEETING ARE PLACED AT PAGE 58 TO 65 OF THE PAPER BOOK. IN THE EXECUTI VE COMMITTEE IT WAS DECIDED TO APPOINT HASH WHO WAS ACTING ALONGWITH THE JOINT DEVELOPER THDC AS JOINT DEVELOPER ON THE TERMS AND CONDITIONS TO BE MENTION ED IN THE JDA. IT WAS FURTHER RESOLVED THAT MEMBER OWING PLOT OF 500 SQYD WOULD RECEIVE A CONSIDERATION OF RS. 82,50,000/- EACH TO BE PAID IN FOUR INSTALLMENTS BY HASH DIRECTLY IN FAVOUR OF THE MEMBERS AND ONE FLAT WIT H SUPER AREA OF 2250 SQF TO BE CONSTRUCTED BY THDC. THE MEMBERS WHO HELD THE P LOT OF 1000SQYD WERE TO RECEIVE A CONSIDERATION OF RS. 1,65,00,000/- AND TW O FLATS CONSISTING OF 2250SQFT TO BE CONSTRUCTED BY THE THDC. IT WAS F URTHER RESOLVED TO ENTER INTO A JDA WITH THDC/HASH. IT WAS ALSO RESOLVED TO EXECUTE IRREVOCABLE POWER OF ATTORNEY BY THE SOCIETY IN FAVOUR OF THDC FOR THIS PURPOSE. THIS RESOLUTION WAS ULTIMATELY RATIFIED IN THE GENERAL B ODY MEETING HELD BY THE SOCIETY ON 25.2.2007. PURSUANT TO THE ABOVE RESOLUT ION, TRIPARTITE JDA WAS EXECUTED (COPY OF THE SAME IS AVAILABLE AT PAGE 15 TO 54 OF FIRST PAPER BOOK). THROUGH RECITATION CLAUSE IT HAS BEEN MENTIONED THA T OWNER IS IN POSSESSION OF LAND MEASURING ABOUT 21.2 ACRES OF LAND WHICH HAS C OME IN THE PURVIEW OF NAGAR PANCHAYAT, NAYA GAON VIDE NOTIFICATION ISSUED ON 18.10.2006 DULY SUBSTITUTED BY ANOTHER NOTIFICATION DATED 21.11.200 6 AND THAT NO PART OF LAND OF THE PROPERTY FALLS UNDER FOREST AREA UNDER THE P UNJAB LAND PRESERVATION ACT. IT HAS BEEN FURTHER RECITED THAT THE SOCIETY HAS AGREED TO ACCEPT THE PROPOSALS OF HASH AND FURTHER EXECUTED THIS AGREEME NT WITH THDC/HASH. HASH WAS RESPONSIBLE TO MAKE PAYMENT TO THE OWNER A S DESCRIBED EARLIER AND THE FLATS WERE TO BE PROVIDED BY THDC. IN CASE OF HASH FAILS TO MAKE THE PAYMENT, THDC AGREED TO MAKE THE PAYMENTS. COPY OF THE RESOLUTION OF THE EXECUTIVE COMMITTEE OF THE SOCIETY DATED 4.1.2007 A S WELL AS RESOLUTION OF THE GENERAL BODY MEETING OF THE SOCIETY DATED 25.2.2007 WERE MADE PART OF JDA BY WAY OF ANNEXURE. THE SOCIETY AGREED TO EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY IN FAVOUR OF THDC AND ALL OTHER NECESSARY DOCUMENTS, AT THE REQUEST OF THE DEVELOPERS. 47 IN CLAUSE 1 OF JDA VARIOUS EXPRESSIONS HAVE BEEN DEFINED. CLAUSE 2 DESCRIBES THE PROJECT AS UNDER: 2.1 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS IN PERPETUITY ALL ITS RIGHTS TO DEVELOP, CONSTRUCT, MORTGAGE, LEASE, LICENSE, SELL AND TRANSFER THE PROPERTY ALONG WITH ANY AND A LL THE CONSTRUCTION, PREMISES, HEREDITAMENTS, EASEMENTS, TREES THEREON I N FAVOUR OF THDC FOR THE PURPOSE OF DEVELOPMENT, CONSTRUCTION, MORTGAGE, SALE, TRANSFER, LEASE, LICENSE AND OR EXPLOITATION FOR FULL UTILIZATION OF THE PROPERTY (RIGHTS) AND TO EXECUTE ALL THE DOCUMENTS NECESSARY TO CARRY OUT , FACILITATE AND ENFORCE THE RIGHTS IN THE PROPERTY INCLUDING TO EXECUTE LEASE A GREEMENT, LICENSE AGREEMENTS, CONSTRUCTION CONTRACTS, SUPPLIER CONTRA CTS, AGREEMENT FOR SALE, CONVEYANCE, MORTGAGE DEEDS, FINANCE DOCUMENTS AND A LL DOCUMENTS AND AGREEMENTS NECESSARY TO CREATE AND REGISTER THE MOR TGAGE, CONVEYANCE, LEASE DEEDS, LICENSE AGREEMENT, POWER OF ATTORNEY, AFFIDA VITS, DECLARATION, INDEMNITIES AND ALL SUCH OTHER DOCUMENTS, LETTERS A S MAY BE NECESSARY TO CARRY OUT, FACILITATE AND ENFORCE THE RIGHTS AND TO REGISTER THE SAME WITH THE REVENUE/COMPETENT AUTHORITY AND TO APPEAR ON OUR BE HALF BEFORE ALL AUTHORITIES, STATUTORY OR OTHERWISE, AND BEFORE ANY COURT OF LAW (THE DEVELOPMENT RIGHTS). THE OWNER HEREBY HANDS OVER THE ORIGINAL TITLE DEEDS OF THE PROPERTY AS MENTIONED IN THE LIST ANNE XED HERETO AND MARKED AS ANNEXURE IV AND PHYSICAL, VACANT POSSESSION OF T HE PROPERTY HAS BEEN HANDED OVER TO THDC SIMULTANEOUS TO THE EXECUTION A ND REGISTRATION OF THIS AGREEMENT TO DEVELOP THE SAME AS SET OUT HEREI N. IT IS HEREBY AGREED AND CONFIRMED THAT WHAT IS STAT ED IN THE RECITALS HEREINABOVE, SHALL BE DEEMED TO BE DECLARATIONS AND REPRESENTATIONS ON THE PART OF THE OWNER AS IF THE SAME WERE SET OUT HEREI N VERBATIM AND FORMING AN INTEGRAL PART OF THE AGREEMENT. 2.2 THE PROJECT SHALL COMPRISE OF DEVELOPMENT/CONST RUCTION OF THE PROPERTY INTO THE PREMISES AS PERMISSIBLE UNDER PUNJAB MUNIC IPAL BUILDING BYE- LAWS/PUNJAB URBAN DEVELOPMENT AUTHORITY OR ANY OTHE R COMPETENT AUTHORITY BY THE DEVELOPER AT THEIR OWN COST AND EXPENSE. THE P ROJECT SHALL BE DEVELOPED AS MAY BE SANCTIONED BY THE CONCERNED LOCAL AUTHORI TY I.E. DEPARTMENT OF LOCAL BODIES, PUNJAB/PUNJAB URBAN PLANNING AND DEV ELOPMENT AUTHORITY (PUDA) OR ANY OTHER COMPETENT AUTHORITY. 2.3 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS ALL ITS DEVELOPMENT RIGHTS IN THE PROPERTY TO THDC TO D EVELOP THE PROPERTY AND UNDERTAKE THE PROJECT AT ITS OWN COSTS, EFFORTS AND EXPENSES WHEREUPON THE DEVELOPER SHALL BE ENTITLED TO APPLY FOR AND OBTAIN NECESSARY SANCTIONS, LICENSES AND PERMISSIONS FROM ALL THE CONCERNED AUT HORITIES FOR THE COMMENCEMENT, DEVELOPMENT AND COMPLETION OF THE PRO JECT ON THE PROPERTY. 11 48 CLAUSE 3 DESCRIBES THE OBLIGATIONS OF THE DEVELO PERS & SOCIETY FOR GETTING THE PLANS, ETC. SANCTIONED FROM COMPETENT A UTHORITY / APPLICATIONS TO BE SIGNED BY OWNER FOR PLANS, DRAWINGS ETC., CONSTR UCTION. CLAUSE 4 DEALS WITH CONSIDERATION CLAUSES 5 TO 8 DEALS VARIOUS ASPECTS OF PROJECT AND OBLIGATIONS OF SOCIETY AND DEVELOPER. CLAUSE 9 TALKS ABOUT OWNE RSHIP AND RIGHTS AND READ AS UNDER: 9 TRANSFER OF OWNERSHIP/RIGHTS 9.1 THE OWNER SHALL SIMULTANEOUSLY ON RECEIPT OF PAYMEN T AS SET OUT IN CLAUSE 4.1 ABOVE, EXECUTE AN IRREVOCABLE SPECIAL PO WER OF ATTORNEY TO THDC FOR DEVELOPMENT OF THE PROPERTY AUTHORIZING TH DC TO DO ALL LAWFUL ACTS, DEEDS, MATTERS AND THINGS PERTAINING TO THE D EVELOPMENT OF THE PROPERTY FOR THE PROJECT ALONG WITH INTERALIA RIGHT TO MORTGAGE THE PROPERTY AND/OR PREMISES, SELL, LEASE, LICENSE THE PREMISES AND RECEIVE/COLLECT MONIES IN ITS NAME IN RESPECT OF THE SAME AND APP ROACH INTERACT, COMMUNICATE WITH THE COMPETENT AUTHORITIES AND FOR DOING ALL ACTS, DEEDS, MATTERS AND THINGS TO BE DONE OR INCURRED BY THDC I N THAT BEHALF AS ALSO TO SIGN ALL LETTERS, APPLICATIONS, AGREEMENTS AND REGI STER THE SAME IF NECESSARY, DOCUMENTS, COURT PROCEEDINGS, AFFIDAVITS AND SUCH OTHER PAPERS CONTAINING TRUE FACTS AND CORRECT PARTICULARS AS MADE FROM TIM E TO TIME BE REQUIRED IN THIS BEHALF. 9.2 THE OWNER SHALL EXECUTE IN FAVOUR OF THDC THE SALE DEED IS IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 4.1(II) TO CLAUSE 4.1(IV) OF THIS AGREEMENT AND EXECUTE ALL OTHER NECESSARY DOCUMENTS AND PAPERS TO COMPLETE THE AFORESAID TRANSACTION. 9.3 THAT ALL THE ORIGINAL TITLE DEEDS PERTAINING T O PROPERTY AS MENTIONED IN ANNEXURE IV HAS BEEN HANDED OVER TO THDC BY THE OWNER AT THE TI ME OF SIGNING OF THIS AGREEMENT AND IN FURTHERANCE OF THE COMMON INTEREST OF THE PARTIES FOR THE DEVELOPMENT OF THE PROJECT AND EXCEPT THE SALE TRANSACTION MADE BY THE OWNER IN FAVOUR OF THDC AS ET OUT IN CLAUSE 4.1 ABOVE. THDC HEREBY UNDERTAKE AND ASSURE THE OWNER THAT THEY SHALL USE THE TITLE DEEDS ONLY FOR THE PURPOSE OF FURTHERANCE OF THE PROJECT IN THE MANNER THAT IT DOES NOT ADVERSELY EFFECT THE OWNER/ALLOTTE E IN ANY MANNER WHATSOEVER. 49 CLAUSE 10 DESCRIBES THE CONSENT GIVEN BY THE SOC IETY TO THDC FOR RAISING FINANCE FOR DEVELOPMENT AND COMPLETION OF P ROJECT. CLAUSE 11 TALKS ABOUT FORMATION OF MAINTENANCE SOCIETY FOR THE PROJ ECT AFTER ITS COMPLETION. CLAUSE 13 TALKS ABOUT TRANSFER OF RIGHTS WHICH READ S AS UNDER: 13 TRANSFER OF RIGHTS THE OWNER HEREIN I.E. THE PUNJABI COOP HOUSE BUILDI NG SOCIETY LTD. ALONG WITH ALL ITS NINETY SIX (96) MEMBERS HAVE GIVEN THEIR EX PRESS, FREE AND CLEAR CONSENT IN WRITING IN THE FORM OF AN AFFIDAVIT/NO O BJECTION CERTIFICATE/CONSENT LETTER WHEREBY THE DEVELOPERS HAVE BEEN ALLOWED TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE PROJECT AND THAT THDC SHALL BE ENTITLED TO TRANSFER THE RIGHTS OBTAINED UNDER THIS AGREEMENT TO ANY THIRD P ARTY AND TO GET THE DEVELOPMENT / CONSTRUCTION WORK COMPLETED ON SUCH T ERMS AND CONDITIONS AS THDC MAY DEEM FIT SO LONG AS IT DOES NOT ADVERSELY EFFECT THE OWNER IN TERMS OF THEIR RIGHT TO RECEIVE ENTIRE CONSIDERATION AS M ENTIONED IN THIS AGREEMENT SUBJECT TO ALL OTHER CONDITIONS MENTIONED THEREIN A S WELL. THE OWNER SHALL AT ALL TIMES PROVIDE FULL SUPPORT TO THE DEVELOPERS HE REIN. 50 OTHER CLAUSES PROVIDE FOR TERMINATION, GENERAL P ROVISIONS, DISCLAIMER, PARTIAL INVALIDITY, ARBITRATION, NOTICES AND FORCE MAJEURE & JURISDICTION. 51 IN ADDITION TO ABOVE AN IRREVOCABLE SPECIAL POWE R OF ATTORNEY HAS ALSO BEEN EXECUTED BY THE SOCIETY IN FAVOUR OF THE DEVEL OPERS I.E. THDC. (COPY OF WHICH IS AVAILABLE AT PAGES 40 TO 52 OF THE PAPER B OOK IN CASE OF SOCIETY IN ITA NO. 556 OF 2012 AS DISCUSSED EARLIER IN PARA 25 (COMPLETE COPY OF SUPPLEMENTARY POWER OF ATTORNEY WAS NOT AVAILABLE I N THE PAPER BOOK OF THE ASSESSEE, THEREFORE, REFERENCE WAS MADE TO THE PAP ER BOOK IN CASE OF THE SOCIETY). 52 THE FIRST MAJOR CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE IS THAT THE POSSESSION WAS NOT GIVEN BY THE SOCIETY BECAUSE ACC ORDING TO HIM AS PER CLAUSE 2.1 OF THE JDA THE POSSESSION OF THE PROPERT Y WAS TO BE HANDED OVER SIMULTANEOUSLY TO THE EXECUTION AND REGISTRATION OF JDA AND SINCE THE JDA WAS NOT REGISTERED, THEREFORE, THE POSSESSION WAS NOT GIVEN. WE CAN NOT ACCEPT THIS CONTENTION BECAUSE IN POWER OF ATTORNEY TRAN SACTIONS, IT IS NOT NECESSARY TO REGISTER THE JDA IF A SPECIAL POWER OF ATTORNEY HAS BEEN GIVEN AND SAME IS REGISTERED. SECONDLY CLAUSE 9.3 OF THE JDA AS REPRODUCED ABOVE CLEARLY SHOW THAT ORIGINAL TITLE DEED WHICH HAVE BE EN MENTIONED ALONG WITH THE POSSESSION IN PARA 2.1 WHICH ACCORDING TO THE LD. C OUNSEL OF THE ASSESSEE WERE TO BE HANDED OVER SIMULTANEOUSLY TO EXECUTION AND REGISTRATION OF THE JDA, IS NOT CORRECT BECAUSE CLAUSE 9.3 CLEARLY MENT ION THAT ORIGINAL TITLE DEED OF THE PROPERTY HAVE BEEN HANDED OVER TO THE THDC A T THE TIME OF SIGNING OF 12 THIS AGREEMENT BECAUSE CLAUSE 9.3 THERE IS NO MENTI ON ABOUT REGISTRATION OF JDA. 53 SPECIAL POWER OF ATTORNEY WHICH HAS BEEN EXECUTE D ON 26.2.2007 AND HAS BEEN REGISTERED ALSO. THE IRREVOCABLE SPECIAL P OWER OF ATTORNEY HAS BEEN EXECUTED AS PROVIDED IN CLAUSE 6.7 OF THE JDA WHICH READS AS UNDER: 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS IN THE PRO PERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY M ORTGAGING THE PROPERTY AND REGISTER THE CHARGE WITH THE COMPETENT AUTHORITY AN D EXECUTE REGISTERED SALE DEEDS) AS SET OUT IN CLAUSE 4.1 (II), (III), (IV) AND (V) AND THE OWNER CONFIRMS, UNDERTAKES, DECLARES AND BINDS ITSELF NOT TO REVOKE THE SAME FOR ANY REASON WHATSOEVER OUT OF ITS OWN WILL AND DISCR ETION WITHOUT OBTAINING A SPECIFIC PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITUTED ATTORNEYS. THROUGH THIS POWER OF ATTORNEY VARIOUS POWERS HAVE BEEN GIVEN LIKE TO ASSIGN, FILE, AMEND ETC. VARIOUS PLANS, DESIGNS TO REPRESENT BEFORE VARIOUS AUTHORITIES, TO APPOINT ARCHITECT, LAWYERS. SOME O F THE SPECIFIC CLAUSES RELEVANT, ARE EXTRACTED BELOW: (J) TO NEGOTIATE AND AGREE TO ANY/OR TO ENTER INTO AGREEMENT(S) TO CONSTRUCT/SELL AND TO UNDERTAKE CONSTRUCTION/SALE O F THE PREMISES ON THE PROPERTY OR ANY PORTION THEREOF WITH/TO SUCH PERSON S(S) OR BODY AND FOR SUCH CONSIDERATION AND UPON SUCH TERMS AND CONDITIONS AS THE ATTORNEY DEEM FIT. (N) TO ENTER UPON THE PROPERTY EITHER ALONE OR WITH OTHERS FOR THE PURPOSE OF DEVELOPMENT, COORDINATION, EXECUTION, IMPLEMENTA TION OF THE PROJECT AND COMMERCIALIZATION OF THE PROPERTY/PREMISES. (T) TO AMALGAMATE THE PROPERTY WITH ANY OTHER CONTI GUOUS, ADJACENT AND ADJOINING LAND SAND PROPERTIES WHEREIN DEVELOPMENT AND/OR OTHER RIGHT, BENEFITS AND INTERESTS ARE ACQUIRED AND/OR PROPOSED TO BE ACQUIRED AND DEVELOPED OR PROPOSED TO BE DEVELOPED BY THDC AND/O R THEIR ASSOCIATE AND/OR GROUP CONCERNS/S AND/OR UTILIZE THE FSI, FAR, DR AN D TDR OF THE CONTIGUOUS, ADJACENT AND ADJOINING LANDS FOR THE PURPOSE OF CON STRUCTING BUILDINGS AND/OR STRUCTURES THEREON AND/OR ON THE PROPERTY OR UTILI ZE SUCH LANDS AND PROPERTIES FOR MAKING PROVISION OF PARKING SPACES THEREON, AND /OR MAY UTILIZE THE SAME FOR ANY OTHER LAWFUL PURPOSE, AS THDC AND/OR THEIR ASSOCIATE AND/OR GROUP CONCERNS MAY IN THEIR SOLD, ABSOLUTE AND UNFETTERED DISCRETION THINK FIT. (W) TO HAND OVER THE POSSESSION OF THE PROPERTY OR ANY PART OR PORTION THEREOF TO THE AUTHORITIES TO WHOM THE SAME IS REQU IRED TO BE HANDED OVER OR OTHERWISE AND TO EXECUTE AND DELIVER ANY UNDERTAKIN GS, DECLARATIONS, AFFIDAVITS, BONDS, DEEDS, DOCUMENTS, ETC. AS MAY BE REQUIRED BY THE AUTHORITIES CONCERNED FOR VESTING SUCH A PART OR PO RTION IN SUCH AUTHORITY AND TO ADMIT EXECUTION THEREOF BEFORE THE CONCERNED COM PETENT AUTHORITY AND GET THE SAME REGISTERED WITH THE CONCERNED SUB-REGISTRA R. (Y) REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVE N TO MORTGAGE, ENCUMBER OR CREATE A CHARGE ON THE PROPERTY OR ANY PART OR PORTION THEREOF AND EXECUTE THE NECESSARY SECURITY DOCUMENTS IN FAVOUR OF ANY BANK/FINANCIAL INSTITUTION TO RAISE FUNDS FOR THE CONSTRUCTION/DEV ELOPMENT OF THE PROPERTY AND FOR THE SAID PURPOSE TO DEPOSIT TITLE DEEDS (IF REQ UIRED) IN RESPECT OF THE PROPERTY IN FAVOUR OF SUCH BANK/FINANCIAL INSTITUT ION, EXECUTE THE NECESSARY DOCUMENTS AND REGISTER THE CHARGE CREATED ON THE PR OPERTY IF SO REQUIRED IN THE REVENUE RECORDS AND/OR DESIRED BY THE ATTORNEY. (AA) TO SELL, TRANSFER, LEASE, LICENSE THE PREMISE S THAT MAY BE CONSTRUCTED ON THE PROPERTY ON OWNERSHIP BASIS, LEASE, LICENSE AND/OR IN ANY OTHER MANNER FOR SUCH PRICE AS THE ATTORNEYS MAY DEEM FIT AND PR OPER. TO COLLECT AND RECEIVE FROM THE PURCHASED, TRANSFEREES, LESSEES, L ICENSEES OF THE PREMISES, MONIES/PRICE AND/OR CONSIDERATION AND/OR MAINTENANC E CHARGES AND TO SIGN AND EXECUTE AND/OR GIVE PROPER AND LAWFUL DISCHARGE FOR THE RECEIPTS. (BB) TO EXECUTE FROM TIME TO TIME ALL THE WRITING, AGREEMENT, DEEDS ETC. IN RESPECT OF THE PREMISES WHICH MAYBE CONSTRUCTED ON THE PROPERTY AND ALSO TO EXECUTE AND SIGN CONVEYANCE, TRANSFER OR SURRENDER IN RESPECT OF THE PROPERTY OR ANY PART THEREOF. (CC) TO SIGN, EXECUTE AND REGISTER THE CONVEYANCES OR ASSIGNMENTS AND/OR POWER OF ATTORNEYS AND/OR OTHER DOCUMENTS AND/OR A GREEMENTS AND/OR ANY OTHER WRITINGS IN RESPECT OF THE PROPERTY IN PART OR FULL AND/OR THE PREMISES CONSTRUCTED THEREON OR ANY PART THEREOF IN FAVOUR O F ANY PERSON AS THE ATTORNEYS MAY DETERMINE INCLUDING IN FAVOUR OF ANY INDIVIDUAL AND/OR LEGAL ENTITLES AND/OR CO-OPERATIVE SOCIETY AND/OR LIMITED COMPANY AND/OR ANY OTHER ENTITY THAT MAY BE FORMED FOR SUCH PURPOSE. 13 (DD) TO ISSUE LETTER OF LIEN/NOCS AND TO SIGN DOCU MENTS ON BEHALF OF THE OWNER AS REQUIRED BY THE PROSPECTIVE BUYERS/LENDING INSTRUCTIONS TO CREATE A CHARGE ON THE ALLOTTED PREMISES. (GG) TO LOOK AFTER AND MAINTAIN THE PROPERTY AND TH E PREMISES CONSTRUCTED THEREON TILL ITS TRANSFER IN FAVOUR OF THE CO-OPER ATIVE SOCIETY OR LIMITED COMPANY OR ANY OTHER ORGANISATION. 54 IT IS PERTINENT TO NOTE THAT POWER/AUTHORIZATION WHICH HAVE BEEN GIVEN BY THE SOCIETY TO THE DEVELO PER, WERE IN FACT WERE REQUIRED TO BE GIVEN IN TERMS OF VARIOUS CLAUSES OF THE JDA. CLAUSE 6.7 REPRODUCED ABOVE ITSELF SHOWS THAT THE SOCIETY WAS REQUIRED TO GIVE POWERS TO RAISE FINANCE TO MORTGAGE THE PROPERTY AN D EVEN THE REGISTRATION OF CHARGE WAS ALSO REQUIRED TO BE GIVE N. FURTHER THROUGH CLAUSE 6.15 IT WAS AGREED THAT DOCUMENTS OF ORIGINAL TITLE DEEDS OF THE PROPERTY WOULD BE HA NDED OVER TO THE DEVELOPER I.E. THDC/HASH SO THAT S AME CAN BE USED IN FURTHERANCE OF DEVELOPMENT OF THE PROJEC T AS WELL AS SECURITY FOR THE MONEY PAID BY THE OWN ER. THROUGH CLAUSE 6.24 IT WAS AGREED THAT DEVELOPER TH DC/HASH WAS ALWAYS PERMITTED BY OWNER TO AMALGAMATE THE PROPERTY WITH ANY OTHER CONTIGUOUS, ADJACENT AN D ADJOINING LAND AND THE PROPERTIES WHEREIN DEVELOP MENTAL AND OR OTHER RIGHTS, BENEFITS AND INTEREST WERE AC QUIRED BY THE DEVELOPER OR WOULD BE ACQUIRED IN FUT URE. THIS CLEARLY SHOWS THAT THE SOCIETY WAS UNDER OBLIGATION IN TERMS OF AGREEMENT ITSELF TO ALLOW THE DEVELOPE R TO AMALGAMATE THE PROJECT. TOWARDS THE END OF CLAUSE 6.24 IT HAS BEEN CLEARLY STATED THAT IN THE EVENT O F TERMINATION OF JDA, PROVISION OF CLAUSE 6 WOULD BE SURVIVING WHICH CLEARLY SHOWS THAT DEVELOPER CONTIN UES TO BE IN POSSESSION FOR THE PURPOSE OF DEVELOPMENT, MORTG AGE ETC. EVEN AFTER TERMINATION. CLAUSE 8 WHICH DE SCRIBES THE OBLIGATION AND UNDERTAKING OF THE THDC/HASH AND PROVIDES SPECIFICALLY THAT ALL ENVIRONMENTAL CLEAR ANCE SHALL BE OBTAINED BY THDC/HASH OUT OF ITS OWN SOURC ES. THUS IT WAS CLEARLY UNDERSTOOD BY THE PARTIES THAT REQUISITE ENVIRONMENTAL CLEARANCES HAD TO BE OBTAIN ED BEFORE START OF THE PROJECT. CLAUSE 10 AGAIN CA STS SPECIFIC OBLIGATION ON THE OWNER SOCIETY TO GIVE CO NSENT TO THDC/HASH TO RAISE FINANCE FOR THE DEVELOP MENT AND COMPLETION OF THE PROJECT ON THE SECURITY OF TH E PROPERTY BY WAY OF MORTGAGING THE PROPERTY. THUS WHATEVER POWER/AUTHORIZATION HAVE BEEN GIVEN THROUGH IRREVOC ABLE SPECIAL POWER OF ATTORNEY ARE EMANATING FROM T HE TERMS AND CONDITIONS AGREED TO AMONG THE PARTIES FR OM THE JDA. 55 THE COMBINED READING OF THE ABOVE CLAUSES OF THE IRREVOCABLE SPECIAL POWER OF ATTORNEY AND JDA CLEARLY SHOW THAT THE DEV ELOPER WAS AUTHORIZED TO ENTER UPON THE PROPERTY FOR NOT ONLY FOR THE PURPOS E OF DEVELOPMENT BUT OTHER PURPOSES ALSO. THDC WAS AUTHORIZED TO AMALGAMATE T HE PROJECT WITH ANY OTHER PROJECT IN THE ADJACENT AREA OR ADJOINING AREA AS P ER CLAUSE (T) OF THE SPECIAL POWER OF ATTORNEY. IF THE POSSESSION WAS NEVER GIV EN TO THE DEVELOPER BY THE SOCIETY THEN HOW THE DEVELOPER COULD AMALGAMATE TH E PROJECT WITH ANOTHER PROJECT WHICH MAY BE ACQUIRED LATTER IN THE ADJOINI NG AREA. THROUGH CLAUSE (W) THDC WAS AUTHORIZED TO HAND OVER THE POSSESSION OF PROPERTY OR PORTION THEREOF TO THE AUTHORITY TO WHOM THE SAME IS REQUIR ED. IN LARGE HOUSING SOCIETY PROJECTS SOMETIMES MUNICIPAL AUTHORITIES TA KES SOME PORTION OF LAND FOR THE PURPOSE OF ROADS, PARKS OR OTHER GENERAL UT ILITY PURPOSES LIKE INSTALLATION OF ELECTRICITY TRANSFORMERS AND BEFORE SANCTIONING THE PLANS THE DEVELOPER IS REQUIRED TO UNDERTAKE THAT SUCH PORTIO NS OF LAND WOULD BE GIVEN FOR SUCH A COMMON PURPOSE. IF POSSESSION WAS NOT GI VEN THEN HOW THDC WAS AUTHORIZED TO HAND OVER SUCH LAND OR PORTIONS THERE OF WHICH HAVE NOT BEEN IDENTIFIED IN THE JDA OUT OF THE TOTAL LAND. SIMIL ARLY THROUGH CLAUSE (Y) THDC HAS BEEN AUTHORIZED TO MORTGAGE, ENCUMBRANCE OR CRE ATE CHARGE ON THE PROPERTY IN FAVOUR OF ANY BANK OR FINANCIAL INSTIT UTION FOR RAISING THE FUNDS FOR THE PROJECT. IN THE ABSENCE OF POSSESSION SUCH POW ERS CANNOT BE GIVEN. CLAUSE (AA) CLEARLY AUTHORIZED THE THDC TO SELL, TR ANSFER, LEASE, LICENSE THE PREMISES WHICH WERE TO BE CONSTRUCTED ON OWNERSHIP BASIS AND FURTHER TO RECEIVE MONEYS AGAINST SUCH SALE ETC. AND TO ISSUE FINAL RECEIPT. NOWHERE IT IS MENTIONED IN THIS CLAUSE THAT SUCH SALE DEEDS WE RE TO BE SINGED BY THE SOCIETY AS CONFIRMING PARTY. IN THE ABSENCE OF POS SESSION IT IS JUST NOT POSSIBLE FOR THE DEVELOPER TO SELL AND TRANSFER THE PREMISES WHICH WERE TO BE CONSTRUCTED. THIS IS FURTHER CLARIFIED BY CLAUSE ( BB) AND (CC) WHICH GIVES THE POWER OF EXECUTION OF CONVEYANCE AND OTHER DOCUMENT S INVOLVING IN RESPECT OF THE PREMISES TO BE CONSTRUCTED WITHOUT ANY INTERFER ENCE OF THE SOCIETY BEING MADE CONFIRMING PARTY. ALL THESE CLAUSES CLEARLY S HOW THAT THE POSSESSION WAS GIVEN BY THE SOCIETY AND/OR ITS MEMBERS TO THDC /HASH ON THE EXECUTION OF IRREVOCABLE POWER OF ATTORNEY. THROUGH THESE CL AUSES OF JDA AND IRREVOCABLE POWER OF ATTORNEY THE DEVELOPER WAS AB LE TO COMPLETELY CONTROL THE PROPERTY AND MAKE USE OF IT NOT ONLY FOR THE PU RPOSE OF DEVELOPMENT BUT ALSO FOR THE PURPOSE OF AMALGAMATION, SALE, MORTGAG E ETC. WHEN THE ABOVE CLAUSES ARE COMPARED ON TOUCH STONE OF THE DISCUSSI ON ON POSSESSION IN PARA 26 TO 28 IN THE CASE OF JASBIR SINGH SARKARIA (SUPR A) WHICH WE HAVE REPRODUCED ABOVE, IT BECOMES CLEAR THAT THE POSSESS ION HAS BEEN GIVEN. 56 IN THAT DISCUSSION, IT HAS BEEN CLEARLY MENTIONE D THAT THE POSITION CONTEMPLATED BY CLAUSE (V) OF SECTION 2(47) OF THE ACT NEED NOT TO BE EXCLUSIVE POSSESSION. WHAT IS REQUIRED IS THAT THE TRANSFERE E BY VIRTUE OF POSSESSION SHOULD BE ABLE TO EXERCISE CONTROL FROM OVERALL INT ENDED PURPOSES. WE DO NOT THINK IN THE PRESENT CASE THE ASSESSEE HAS GIVEN ON LY A LICENSE AS CLAIMED BY LD. COUNSEL OF THE ASSESSEE BECAUSE OF THE POWERS O F SELLING, AMALGAMATING ETC. MENTIONED IN THE JDA AND IRREVOCABLE SPECIAL POWER OF ATTORNEY. THE ISSUE HAS BEEN DISCUSSED IN HE JUDGMENT OF JASBIR S INGH SARKARIA (SUPRA) IN FURTHER DISCUSSION WHICH HAS BEEN MADE IN PARA 33 R EGARDING POWER OF ATTORNEY (WHICH HAS BEEN REPRODUCED EARLIER). IN T HAT CASE THE POWERS WERE GIVEN TO ENTER UPON AND SURVEY THE LAND, PREPARE LA Y OUT PLANS, SUBMIT BUILDING PLAN FOR SANCTION WITH THE APPROPRIATE AUT HORITIES TO CONTROL, MANAGE AND LOOK AFTER AND SUPERVISE THE PROPERTY, TO OBTAI N WATER AND SEWERAGE, DISPOSAL AND ELECTRICITY CONNECTION. IN THAT CASE THE DEVELOPER WAS AUTHORIZED TO MORTGAGE THE PROPERTY TO OBTAIN MONEY FOR MEETIN G THE COST OF CONSTRUCTION ON SECURITY AND MORTGAGE OF LAND FALLING ONLY TO TH E DEVELOPERS SHARE. IN THAT CASE IT WAS HELD THAT GPA WAS NOT A LICENSE TO ENTE R UPON FOR DOING SOME 14 PRELIMINARY ACTS IN RELATION TO DEVELOPMENT OF WORK BUT THE POWER TO CONTROL THE LAND HAS ALSO BEEN CONFIRMED. IT HAS ALSO BEEN NOTED THAT THE AGREEMENT DESCRIBED THE POWER OF ATTORNEY AS IRREVOCABLE AND EXTRA DECLARATION TO THAT EFFECT IN THE POWER OF ATTORNEY IS NOT WITHOUT SIGN IFICANCE. IN CASE BEFORE US, MANY MORE POWERS HAVE BEEN GIVEN TO THDC IN ADDITIO N TO POWERS WHICH HAVE BEEN DESCRIBED IN THAT JUDGMENT AND POWER OF ATTORN EY HAS BEEN DESCRIBED AS IRREVOCABLE IN CLAUSE 6.7 OF JDA. THEREFORE, IT I S CLEAR THAT THE ASSESSEES PLEA THAT THE POSSESSION WAS TO BE GIVEN ONLY AT TH E TIME OF REGISTRATION OF THE JDA, IS NOT CORRECT. ONCE IRREVOCABLE POWER WAS GI VEN THEN IT CANNOT BE SAID THAT THE POSSESSION WAS NOT GIVEN. THE ISSUE REGAR DING REVOCATION OF IRREVOCABLE POWER OF ATTORNEY AND CANCELLATION OF T HE JDA WOULD BE DISCUSSED LATER ON WHILE DEALING WITH THAT CONTENTION. 57 WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR F OR THE REVENUE THAT INTERPRETATION OF CLAUSE (V) TO SECTION 2(47) SHOUL D BE MADE IN THE LIGHT OF HEYDONS RULE. THERE IS NO FORCE IN THE OBJECTION OF THE LD. COUNSEL OF THE ASSESSEE THAT THIS CLAUSE SHOULD BE INTERPRETED ON GENERAL RULES OF INTERPRETATION PARTICULARLY IN THE LIGHT OF THE FAC T THAT NO REASON HAS BEEN GIVEN FOR THE SAME. HEYDONS RULE HAS BEEN APPLIED BY THE INDIAN COURTS MANY TIMES. THE RULE WAS APPLIED AND INITIATED IN HEYDONS CASE (1584) 3 CO. REP 7A. THIS RULE WAS UPHELD BY THE CONSTITUTION B ENCH OF HON'BLE APEX COURT IN CASE OF BENGAL IMMUNITY CO. LTD. V STATE OF BIHAR (1955) 2 SCR 603 FOR CONSIDERATION OF ARTICLE 286 OF THE CONSTITUTIO N. IT HAS BEEN HELD IN CASE OF DR. BALIRAM WAMAN HIRAY V. MR. JUSTICE B. LENTI N AND ANOTHER, 176 ITR 1 THAT FOR UNDERSTANDING AMENDMENT IN THE ACT, PERHAP S HEYDONS RULE IS BEST RULE FOR INTERPRETATION OF SUCH AMENDMENT. WE FIND THAT WITHOUT MENTIONING THIS RULE LD. AUTHORITY FOR ADVANCE RULING HAS DISCUSSED THIS ISSUE IN PARA 27 OF THE JUDGMENT WHICH WE HAVE EXTRACTED ABOVE. IT HAS BEEN HELD THAT IF POSSESSION REFERRED TO IN CLAUSE (V) IS TO BE UND ERSTOOD AS EXCLUSIVE BASIS OF THE TRANSFEREE THEN VERY PURPOSE OF THE AMENDMENT O R ENLARGEMENT OF THE DEFINITION OF TRANSFER WOULD GET DEFEATED. WE ARE REPRODUCING FOLLOWING HEAD NOTE OF THE HON'BLE APEX COURT IN CASE OF DR. BALIR AM WAMAN HIRAY V. MR. JUSTICE B. LENTIN AND ANOTHER (SUPRA): THE FOLLOWING PRINCIPLES ENUNCIATED IN HEYDONS CA ASE (1584) 3 CO. REP 7A AND FIRMLY ESTABLISHED, ARE STILL IN FULL FORCE AND EFFECT: THAT FOR THE SURE AND TRUE INTERPRETATION OF ALL STATUTES IN GENERALS (BE THEY PENAL OR BENEFICIAL, RESTRICTIVE OR ENLARGING OF THE COMMON LAW), FOUR T HINGS ARE TO BE DISCERNED AND CONSIDERED: (1) WHAT WAS THE COMMON LAW BEFORE THE MAKING OF THE ACT; (2) WHAT WAS THE MISCHIEF AND DEFECT FOR WHICH THE COMMON LAW DID NOT PROVIDE; (3) WHAT REMEDY PARLIAMENT HAS RESOLVED AN D APPOINTED TO CURE THE DISEASE OF THE COMMON WEALTH AND (4) THE TRUE REASO N OF THE REMEDY. AND THEN, THE OFFICE OF ALL THE JUDGES IS ALWAYS TO MAK E SUCH CONSTRUCTION AS SHALL SUPPRESS THE EVASIONS FOR THE CONTINUANCE OF THE MI SCHIEF AND PRO PRIVATE COMMANDO AND TO ADD FORCE AND LIFE TO THE CURE AND REMEDY ACCORDING TO THE TRUE INTENT OF THE MAKERS OF THE ACT PRO BONO PUBLI C. THERE IS NOW THE FURTHER ADDITION THAT REGARD MUST BE HAD NOT ONLY TO THE EX ISTING LAW BUT ALSO TO PRIOR LEGISLATION AND TO THE JUDICIAL INTERPRETATION THER EOF. 58 GOING BY THE HEYDONS RULE OF INTERPRETATION IF WE ANALYZE THE PURPOSE OF CLAUSE (V) OF SECTION 2(47) THEN IT WOULD EMERGE THAT LAW BEFORE MAKING THE AMENDMENT WAS THAT CAPITAL GAIN COULD BE CHARGED ON LY IF A TRANSFER HAS BEEN EFFECTED AND TRANSFER WAS INTERPRETED BY VARIOUS CO URTS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN CASE OF ALAPATI VENKAT RAMIAN V CIT, 57 ITR 185 (SC) THAT PROPER CONVEYANCE OF THE PROPERTY HAS BEE N MADE UNDER THE COMMON LAW. THE MISCHIEF WAS WITH REGARD TO TRANSFER IN TH E SENSE THAT THERE WAS COMMON PRACTICE THAT PROPERTIES WERE BEING TRANSFER RED IN SUCH A MANNER THAT TRANSFEREE COULD ENJOY THE BENEFIT OF THE PROPERTY WITHOUT EXECUTION OF THE CONVEYANCE DEED. THIRDLY WE NEED TO EXAMINE THE REM EDY WHICH WAS INSERTION OF CLAUSE (V) AND (VI) SO THAT CASES OF GIVING POSS ESSION OF THE PROPERTY, WERE ALSO COVERED BY THE DEFINITION OF TRANSFER. FOURTH LY, TRUE REASON FOR THIS AMENDMENT WAS TO PLUG A LOOP HOLE IN THE LAW. THER EFORE, CONSIDERING THE PURPOSE OF INSERTION OF CLAUSE (V) AND (VI) OF SECT ION 2(47) AND VARIOUS CLAUSES OF POWER OF ATTORNEY AND JDA IT BECOMES ABSOLUTELY CLEAR THAT THE SOCIETY HAS HANDED OVER THE POSSESSION OF THE PROPERTY TO THDC/ HASH. 59 SECOND IMPORTANT CONTENTION ON BEHALF OF THE ASS ESSEE IS THAT JDA WAS EXECUTED ON 25.2.2007 AND IF POSSESSION WAS GIVEN T HEN HOW THE ASSESSEE WAS HAVING POSSESSION IN TERMS OF LATER SALE DEEDS EXECUTED ON 2.3.2007 AND 25.4.2007. THE SOCIETY HAS EXECUTED TWO SALE DEEDS FOR CONVEYANCE OF PARTS OF THE TOTAL LAND. FIRST SALE DEED HAS BEEN EXECU TED ON 2.3.2007 FOR 3.08 ACRES AND RECITATION CLAUSE (A) READS AS UNDER: CLAUSE (A) - THE VENDOR IS THE ABSOLUTE OWNER AND I N POSSESSION OF LAND TOTAL MEASURING 169 KANAL 7 MARLAS EQUIVALENT TO APPROX. 21.2 ACRES IN VILLAGE KANSAL, TEHSIL MOHALI AND MORE PARTICULARLY DESCRIBED IN SCHEDULE A HEREUNDER WRITTEN AND DELINEATED IN GREEN COLOUR BO UNDARY LINE IN THE SHIZRA PLAN ISSUED BY THE PATWARI DATED 23.2.2007. 60 ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE IF SOCIETY HAD ALREADY GIVEN THE POSSESSION THEN THE SOCIETY WOULD NOT HAV E / HAD POSSESSION ON 2.3.2007 OF THE LAND. AT FACE VALUE THIS ARGUMENT LOOKS ATTRACTIVE BUT WHEN EXAMINED IN TERMS OF POSSESSION WHICH HAS BEEN EXPL AINED IN CASE OF JASBIR SINGH SARKARIA (SUPRA), ACTUAL REALITY WILL COME FO RWARD. IN THIS JUDGMENT 15 CONCEPT OF CONCURRENT POSSESSION HAS ALSO BEEN DISC USSED AND FOLLOWING EXTRACT OF PARAGRAPH 55 OF SALMONDS JURISPRUDENCE HAS BEEN EXTRACTED WHICH READS AS UNDER: IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS C OULD NOT BE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AS A GENERAL PROP OSITION THIS IS TRUE: FOR EXCLUSIVENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUSIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED A T THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCURRENT REALIZATION. HENC E THERE ARE SEVERAL POSSIBLE CASES OF DUPLICATE POSSESSION. 1 MEDIATE AND IMMEDIATE POSSESSION CROSS-OBJECTIONS -EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2 TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON; JUST AS THEY MAY OWE IT IN COMMON. THE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXER CISE POSSESSION RIGHT TO A LIMITED EXTENT AND FOR A LIMITED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN V ERY WELL BE RECONCILED. 61 IN FURTHER DISCUSSION IN PARA 26 TO 28 OF THE AB OVE DECISION IT HAS BEEN HELD THAT IT IS NOT NECESSARY IN TERMS OF CLAUSE (V ) THAT THE DEVELOPER SHOULD HAVE EXCLUSIVE POSSESSION. THE CONCURRENT POSSESSI ON OF THE OWNER IS POSSIBLE WHICH GIVES RIGHTS TO A LIMITED EXTENT FOR A LIMITED PURPOSE. THUS IT IS VERY MUCH POSSIBLE TO HOLD CONCURRENT POSSESSION. MERE RECITATION IN THE SALE DEED TO THE EFFECT THAT THE SOCIETY WAS OWNER OF AN D IN POSSESSION OF LAND MEASURING 21.2 ACRES, DOES NOT SHOW THAT THE SOCIET Y WAS HAVING ACTUAL POSSESSION. WHAT THE SOCIETY WAS HAVING IS ONLY OW NERSHIP RIGHT AND THE POSSESSION WAS ONLY CONCURRENT AS THE POSSESSARY RI GHT. FURTHER IT IS A STANDARD CLAUSE IN THE CONVEYANCE DEED AND IT DOES NOT PROVE OR INDICATE ANYTHING EXCEPT THAT A PORTION OF LAND MEASURING 3. 08 ACRES, HAS BEEN SOLD / CONVEYED TO THE DEVELOPER. IN THE LIGHT OF THIS POS ITION, THIS CONTENTION IS REJECTED. 62 WE FIND NO FORCE IN THE NEXT CONTENTION OF THE L D. COUNSEL OF THE ASSESSEE THAT POSSESSION IF AT ALL WAS GIVEN SHOULD BE HELD TO BE ONLY A LICENSE AS DEFINED IN SECTION 52 OF INDIAN EASEMENT ACT BECAUSE CLEARLY AS PER SECTION 52 OF THIS ACT, WHERE ONE PERSON GRANTS TO ANOTHER OR MANY OTHER PERSONS TO DO SOMETHING UPON IMMOVEABLE PROPERTY WH ICH IN THE ABSENCE OF SUCH RIGHT WOULD BE UNLAWFUL. 63 HERE IN CASE BEFORE US, THE RIGHT HAS NOT BEEN G IVEN FOR THE PURPOSE OF DOING SOMETHING BUT ALL THE POSSIBLE RIGHTS IN PROP ERTY INCLUDING RIGHT TO SELL, RIGHT TO AMALGAMATE THE PROJECT WITH ANOTHER PROJEC T IN THE ADJOINING AREA WHICH MAY BE ACQUIRED LATER, RIGHT TO MORTGAGE ETC. CLEARLY SHOW THAT RIGHTS GIVEN BY THE SOCIETY ARE MUCH MORE LARGER THAN WHAT IS COVERED IN THE TERM LICENSE. 64 FOURTH CONTENTION IS THAT THE MONEY RECEIVED AT THE TIME OF EXECUTION OF JDA CAN BE TERMED AS ADVANCE AND WHATEVER MONEY HAS BEEN RECEIVED HAS A LREADY BEEN SHOWN AS CAPITAL GAIN. WE FIND NO FORC E IN THIS SUBMISSION BECAUSE SECTION 45 WHICH HAS BEEN E XTRACTED ABOVE CLEARLY PROVIDE FOR TAXING OF PROFIT S AND GAINS ARISING FROM THE TRANSFER. WE HAVE ALREADY DI SCUSSED THE IMPLICATION OF SECTION 45 R.W.S. 48 WHI LE DISCUSSING THE LEGAL POSITION. WE HAD ALSO DISCUSS ED THIS ISSUE IN THE LIGHT OF THE DECISION IN CASE OF JASBIR SINGH SARKARIA (SUPRA) AND POINTED OUT THAT WHEN SE CTION 45 IS READ ALONG WITH SECTION 48 IT BECOMES C LEAR THAT WHOLE OF THE CONSIDERATION WHICH IS RECEIVED OR ACC RUED IS TO BE TAXED ONCE CAPITAL ASSET IS TRANSFERR ED IN A PARTICULAR YEAR. 65 WE WOULD LIKE TO DISCUSS THIS ASPECT OF THE ISS UE IN LITTLE MORE DETAIL AND TRY TO UNDERSTAND WHY THE WHOLE OF THE CONSIDERATION IS REQUIRED TO BE TAXED. AT THE COST OF REPETITION LET US AGAIN REPRODUCE THE OBSERVATIONS OF THE LD. AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) WHICH WE HAVE EARLIER EXTRA CTED AT PARA 40 AND THE RELEVANT PORTION IS AS UNDER: 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFE RRING TO THE PROVISIONS OF SECTION 45 AND OBSERVED AS UNDER:- .THE SECTION CAN BE ANALYSED THUS : (A) TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME OF THE ASSESSEE/ TRANSFEROR (D) SUCH INCOME SHALL BE DEEMED TO BE THE INCOME OF THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER HAD T AKEN PLACE. 16 TWO ASPECTS MAY BE NOTED AT THIS JUNCTURE. FIRSTLY , THE EXPRESSION USED IS ARISING WHICH IS NOT TO BE EQUATED WITH THE EXPRESSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSIO N ACCRUE ARE USED IN THE INCOME-TAX ACT EITHER COL LECTIVELY OR SEPARATELY ACCORDING TO THE CONTEXT AN D NATURE OF THE CHARGING PROVISION. THE SECOND POINT WHICH DESE RVES NOTICE IS THAT BY A DEEMING PROVISION, THE PR OFITS OR GAINS THAT HAVE ARISEN WOULD BE TREATED AS THE INC OME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOO K PLACE. THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPI TAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREV IOUS YEAR IN WHICH THE TRANSFER WAS EFFECTED OR DEEMED TO HA VE TAKEN PLACE. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AND LEADING TEXT BOOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL POSITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOU S YEAR IN WHICH THE TRANSFER TOOK PLACE. SINCE THIS IS A ST ATUTORY FICTION, THE ACTUAL YEAR IN WHICH THE SALE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREVIOUS TO THE PREVIOUS Y EAR OF TRANSFER, IS BESIDE THE POINT. THE ENTIRETY OF THE SUM OR SUMS RECEIVED IN ANY EARLIER YEAR OR YEARS WOULD BE REGARDED AS THE CAPITAL GAINS ARISING IN THE PREVI OUS YEAR OF TRANSFER. . . . . IN THE WORDS OF SECTION 45, THE CAPITAL GAI NS ARISING FROM THE TRANSFER 'SHALL BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE'. SO, THE PA YMENTS OF CONSIDERATION STIPULATED TO BE PAID IN F UTURE WOULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 66 THE ABOVE CLEARLY SHOWS THAT IT IS BECAUSE OF EX PRESSION USED IN SECTION 45 THAT IS ARISING WHICH CANNOT BE EQUATED WITH RECEIPT. IN THIS RESPECT THE LD. AUTHORITY HAS QUOTED A VERY OLD DECISION OF HON'BLE MADRAS HIGH COURT IN CASE OF T.V. SUNDARAM IYENGAAR AND SONS LTD. V. CIT, 37 ITR 26 (MAD). AT PARA 13 OF THE SAID DECISION IS EXTRACTED IN THE FOLLOWING MAN NER: 13. IN T.V. SUNDARAM IYENGAR AND SONS LTD. V. CIT [ 1959] 37 ITR 26, A DIVISION BENCH OF THE MADRAS HIGH COURT WHILE CONSTRUING SECTION 12 B OF THE IND IAN INCOME-TAX ACT, 1922 CLARIFIED THE IMPORT OF TH E EXPRESSION ARISE AS FOLLOWS SECTION 12B DOES NOT REQUIRE THAT PROFITS SHOULD HAVE BEEN ACTUALLY RECEIVED. IT IS SUFFICIENT IF TH EY HAVE ARISEN. THROUGHOUT THE INCOME-TAX ACT THE WORDS ACCRUE AN D ARISE ARE USED IN CONTRADISTINCTION TO THE WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THIS WAS EXPLAINED BY FRY L.J., IN COLQUHOUN V. BROOKS. THE LEARNED J UDGE OBSERVED: I THINK, THEREFORE, THAT THE WORDS ARISE OR ACCR UING ARE GENERAL WORDS DESCRIPTIVE OF A RIGHT TO R ECEIVE PROFITS. SEE ALSO CIT V. ANAMALLAIS TIMBER TRUST LTD. TO ATT RACT THE OPERATION OF SECTION 12B IT IS THEREFORE S UFFICIENT IF THE PROFITS AROSE. THEY NEED NOT HAVE BEEN ACTUALLY RECEIVED. 14. THUS THE CRITERION OF RIGHT TO RECEIVE THE PROF ITS / GAINS WAS APPLIED IN THAT CASE. 15. THE LEGAL POSITION DOES NOT THEREFORE ADMIT OF ANY DOUBT THAT THE ACTUAL RECEIPT OF THE ENTIRE SAL E CONSIDERATION DURING THE YEAR OF TRANSFER IS NOT NECESSARY FOR THE PURPOSE OF COMPUTING CAPITAL GAIN S. FURTHER THE EXPRESSION ARISING HAS BEEN DEFINED I N THE ADVANCED LAW LEXICON BY P. RAMANATHA AIYER EDITED BY Y.V. CHANDRACHUD, FORMER CHIEF JUST ICE OF INDIA: THE WORDS ARISING OR ACCRUING DESCRIBE A RIGHT T O RECEIVE PROFITS, AND THAT THERE MUST BE A DEBT OW ED BY SOMEBODY. LD. COMMISSIONER OF INCOME TAX, WEST BEN GAL-II, CALCUTTA V. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. AIR 1986 S.C 1805, 1807. THE EXPRESSION ACCRUAL OF INCOME HAS BEEN DEFINED IN THE SAME LEXICON AS UNDER: ACCRUAL OF INCOME. E.D JASSOON & C. LTD. V LD. COM MISSIONER OF INCOME TAX, AIR 1954 S.C 470 QUOTED INCOME MAY ACCRUE TO AN ASSESSEE WITHOUT THE ACTUAL RECEIPT OF THE SAME. IF THE ASSESSEE ACQUIRES A R IGHT TO RECEIVE THE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THOUGH IT MAY BE RECEIVED LATER ON I TS BEING ASCERTAINED. THE BASIC CONCEPTION IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. BHOG ILAL V INCOME TAX LD. COMMISSIONER, AIR 1956 BOM 411, 414 (INCOME TAX ACT (11 OF 1992) SS. 16(1) AND (3)} 67 THE COMBINED READING OF THESE TWO DEFINITIONS SH OW THAT IT (I.E. ACCRUAL) IS NOT EQUAL TO THE RECEI PT OF INCOME. IN FACT IT IS A STAGE BEFORE THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABLE. IN OTHER WORDS, ONCE THE VESTED RIGHTS COME TO A PERSON THEN IT CAN BE SAID THAT SUCH RIGHT OR INCOME HAS ACCRUED TO SUCH PERSON. THE CONCEPT OF ACCRUAL OR AROUSAL OF INCOM E HAS ALSO BEEN DISCUSSED BY THE LD. AUTHOR S. RAJA RATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPATH IYENGAR XITH EDITION BY DISCUSSING THE MEANING OF ACCRUED AND ARISE AT PAGE 1300 IT HAS BEEN OBSERV E AS UNDER: (1) IMPORTANT PRINCIPLES.- (A) MEANING ACCRUE MEANS TO ARISE OR SPRING AS A NATURAL GROWTH OR RE SULT, TO COME BY WAY OF INCREASE. ARISING MEANS COMING I NTO EXISTENCE OR NOTICE OR PRESENTING ITSELF. ACC RUE CONNOTES GROWTH OR ACCUMULATION WITH A TANGIBLE SHA PE SO AS TO BE RECEIVABLE. IN A SECONDARY SENSE, TH E TWO WORDS TOGETHER MEAN TO BECOME A PRESENT AND ENFORC EABLE RIGHT AND TO BECOME A PRESENT RIGHT OF DEM AND. IN THE ACT, THE TWO WORDS ARE USED SYNONYMOUSLY WIT H EACH OTHER TO DENOTE THE SAME IDEA OR IDEAS VERY SIMILAR, AND THE DIFFERENCE LIES ONLY IN THIS THAT ONE IS MO RE APPROPRIATE THAN THE OTHER, WHEN APPLIED, TO A P ARTICULAR CASE. IT WILL INDEED BE DIFFICULT TO DISTINGUISH BE TWEEN THE TWO WORDS, BUT IT IS CLEAR THAT BOTH THE WORDS ARE USED IN CONTRADISTINCTION TO THE WORD RECEIVE AND INDI CATE A RIGHT TO RECEIVE. THEY REPRESENT A STAGE ANT ERIOR TO THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABLE AN D CONNOTE A CHARACTER OF THE INCOME, WHICH IS MORE OR LESS INCHOATE AND WHICH IS SOMETHING LESS THAN A RE CEIPT. AN UNENFORCEABLE CLAIM TO RECEIVE AN UNDETER MINED OR UNDEFINED SUM DOES NOT GIVE RISE TO ACCRUAL. 17 68 THEREFORE, IT IS NOT ONLY THE MONEY WHICH HAS B EEN RECEIVED BY THE ASSESSEE WHICH IS REQUIRED TO B E TAXED BUT THE CONSIDERATION WHICH HAS ACCRUED TO TH E ASSESSEE IS ALSO REQUIRED TO BE TAXED. IN VIEW OF THIS, THIS CONTENTION IS REJECTED. 69 THE FIFTH CONTENTION MADE BY THE LD. COUNSEL FO R THE ASSESSEE WAS THAT SINCE SECTION 53A OF THE TRANSFER OF PROPERTY ACT ITSELF HAS UNDERGONE AMENDMENT W.E.F. 24.9.2001 BY WHICH THE AGREEMENT R EFERRED TO IN THAT SECTION IS REQUIRED TO BE REGISTERED AND THEREFORE, NOW IN SECTION 2(47)(V) ONLY THE AMENDED PROVISIONS CAN BE READ. WE FIND NO FORCE I N THIS CONTENTION. IT IS WELL KNOWN THAT SECTION 53A OF THE TRANSFER OF PROP ERTY ACT WAS PASSED ON EQUITABLE DOCTRINE SO AS TO PROTECT THE TAKING OVER OR RETENTION OF THE POSSESSION BY THE TRANSFEREE. IT WAS NOT A SOURCE BY WHICH TITLE OF IMMOVABLE PROPERTY COULD BE ACQUIRED. SECTION 53A OF TP ACT READ AS UNDER:- 53A. PART PERFORMANCE.- WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPE RTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH T HE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN B E ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSES SION, CONTINUES IN POSSESSION IN PART PERFORMANCE O F THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF TH E CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO P ERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTAN DING THAT THE CONTRACT, [***]WHERE THERE IS AN INSTRUMENT OF TRAN SFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN T HE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING I N FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDE R HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE A ND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTI NUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PR OVIDED BY THE TERMS OF THE CONTRACT 70 A PLAIN READING OF THE ABOVE PROVISION SHOWS THAT IT PROVIDES A SAFETY MEASURE OR A SHIELD IN THE HANDS OF THE TRANSFEREE TO PROTECT THE POSSESSION OF ANY PROPERTY WHICH HAS BEEN GIVEN BY THE TRANSFEROR AS LAWFUL POSSESSION UNDER A PARTICULAR AGREEMENT OF SALE. THIS POSITIO N OF LAW WAS INCORPORATED IN THE DEFINITION OF TRANSFER BY INSERTION OF CLAUSE S (V) & (VI) IN SECTION 2(47) OF THE ACT. IT IS IMPORTANT TO NOTE THAT CLAUSE (V) U SES THE EXPRESSION CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. AC T, THEREFORE, CLEARLY THE IDEA IS THAT AN AGREEMENT WHICH PROVIDES SOME DEFENSE IN THE HANDS OF TRANSFEREE WAS INCORPORATED UNDER THE DEFINITION OF TRANSFER IN THE INCOME TAX ACT. NOW ORIGINALLY SECTION 53A OF T.P. ACT PROVIDED THAT EV EN IF THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED, WHICH MEANS THE RIGHT OF DEFENDING THE POSSESSION WAS AVAILABLE EVEN IF THE CONTRACT WAS NOT REGISTERED BUT BY AMENDMENT ACT 48 OF 2001, THE EXPRESSION TH OUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED, HAS BEEN OMITT ED WHICH MEANS FOR THE PURPOSE OF POSSESSION U/S 53A OF T.P. ACT, A PERSON HAS TO PROVE THAT POSSESSION HAS BEEN GIVEN UNDER A REGISTERED AGREEM ENT. IN OTHER WORDS, NOW U/S 53A OF T.P. ACT, THE AGREEMENT REFERRED IS REQU IRED TO BE REGISTERED. THIS REQUIREMENT CANNOT BE READ IN CLAUSE (V) OF SECTION 2(47) BECAUSE THAT REFERS ONLY TO THE CONTRACT OF THE NATURE OF SECTION 53A O F T.P. ACT WITHOUT GOING INTO THE CONTROVERSY WHETHER SUCH AGREEMENT IS REQUIRED TO BE REGISTERED OR NOT. THE LD. COUNSEL FOR THE ASSESSEE HAD REFERRED TO TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SURANA STEELS V DCIT 237 ITR 777 (SC) FOR THE PROPOSITION THAT WHEN A SECTION OF A PARTICULAR STA TUTE IS INTRODUCED INTO ANOTHER ACT IT MUST BE READ IN THE SAME SENSE AS I T BORE IN THE ORIGINAL ACT. THE CAREFUL PERUSAL OF THAT JUDGMENT WOULD SHOW THA T SITUATION IS APPLICABLE ONLY WHEN A PARTICULAR PROVISION OF AN ACT HAS BEEN INCORPORATED IN THE LATER ACT. IN THAT CASE A QUESTION AROSE THAT FOR THE P URPOSE OF MAT PROVISION WHAT IS THE MEANING OF PAST LOSSES OR UNABSORBED DEPRECI ATION. IT WAS FOUND THAT IN EXPLANATION TO SECTION 115J CLAUSE (IV), THE FOLLOW ING EXPRESSION WAS USED:- (IV) THE AMOUNT OF THE LOSS OR THE AMOUNT OF DEPRE CIATION WHICH WOULD BE REQUIRED TO BE SET OFF AGAINST THE PROFIT OF THE RE LEVANT PREVIOUS YEAR AS IF THE PROVISIONS OF CLAUSE (B) OF THE FIRST PROVISO TO SU B SECTION (I) OF SECTION 205 OF THE COMPANIES ACT, 1956 (1 OF 1956) ARE APPLICABLE. 71 THE HON'BLE APEX COURT REFERRED TO THE PRINCIPLE S OF STATUTORY INTERPRETATION BY SHRI G.P.SINGH AND EXTRACTED FOLL OWING PIECE: SECTION 115J, EXPLANATION CLAUSE (IV), IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE SUBJECT, JUSTICE G. P. SINGH STATES IN PRINCIPLES OF STATUTORY INTERPRETATION (7TH EDITION, 1999). INCORPORATION OF AN EARLIER ACT INTO A LATER ACT IS A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIENCE IN ORDER TO AVOID VERBA TIM REPRODUCTION OF THE PROVISIONS OF THE EARLIER ACT INTO THE LATER. WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVISIONS ARE INCORPORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BECOME PART AND PARCEL OF THE LATER AC T AS IF THEY HAD BEEN 'BODILY TRANSPOSED INTO IT'. THE EFFECT OF INCORPOR ATION IS ADMIRABLY STATED BY LORD ESHER, M.R. : 'IF A SUBSEQUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HELD, 18 IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF T HEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN, OR PRINTED IN IT.(P.233) EVEN THOUGH ONLY PARTICULAR SECTIONS OF AN EARLIER ACT ARE INCORPORATED INTO LATER, IN CONSTRUING THE INCORPORATED SECTIONS IT M AY BE AT TIMES NECESSARY AND PERMISSIBLE TO REFER TO OTHER PARTS OF THE EARLIER STATUTE WHICH ARE NOT INCORPORATED. AS WAS STATED BY LORD BLACKBURN: 'WHE N A SINGLE SECTION OF AN ACT OF PARLIAMENT IS INTRODUCED INTO ANOTHER ACT , I THINK IT MUST BE READ IN THE SENSE IT BORE IN THE ORIGINAL ACT FROM WHICH IT WAS TAKEN, AND THAT CONSEQUENTLY IT IS PERFECTLY LEGITIMATE TO REFER TO ALL THE REST OF THAT ACT IN ORDER TO ASCERTAIN WHAT THE SECTIONS MEANT, THOUGH THOSE OTHER SECTIONS ARE NOT INCORPORATED IN THE NEW ACT. (P.244) 72 ON THE BASIS OF ABOVE OBSERVATION, IT WAS HELD T HAT MEANING OF PAST LOSSES OR UNABSORBED DEPRECIATION HAS TO BE TAKEN S AME AS WAS DEFINED IN THE COMPANIES ACT. IN THIS CASE IT IS CLEAR THAT PROVI SION ITSELF REFERS TO CLAUSE (B) OF SUB SECTION (1) OF SECTION 205 OF COMPANYS ACT 1956 AND THEREFORE, SAME MEANING WAS GIVEN TO PAST LOSSES OR UNABSORBED DEPRECIATION AS IS GIVEN UNDER THE COMPANIES ACT, 1956. 73 IN CASE OF CLAUSE (V) TO SECTION 2(47), CLEARLY THE EXPRESSION USED IS CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. ACT, WHICH MEANS IT IS NOT A CASE OF INCORPORATION OF ONE PIECE OF LEGI SLATION INTO ANOTHER PIECE OF LEGISLATION. IF THAT WAS THE INTENTION OF THE PARLI AMENT, OBVIOUSLY CLAUSE (V) WOULD CONTAIN THE EXPRESSION CONTRACT AS DEFINED U NDER SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. FURTHER, IT IS SE TTLED POSITION OF LAW THAT ANY INTERPRETATION WHICH COULD RENDER A PARTICULAR PROV ISION REDUNDANT SHOULD BE AVOIDED. IF THE CONTENTION OF THE LD. COUNSEL WAS T O BE ACCEPTED, OBVIOUSLY THE PROVISIONS OF CLAUSE (V) OF SECTION 2(47) OF THE AC T WOULD BECOME REDUNDANT IN THE SENSE THAT REGISTRATION OF AGREEMENT WOULD AGAI N BE MADE COMPULSORY BUT SINCE PROPERTIES WERE BEING SOLD IN THE MARKET ON POWER OF ATTORNEY BASIS THROUGH UNREGISTERED AGREEMENTS WHICH WOULD MAKE TH IS PROVISION REDUNDANT. THIS POSITION WE HAVE ALREADY DISCUSSED EARLIER WHI LE DISCUSSING THE HEYDONS RULE IN THE INTERPRETATIONS OF THIS CLAUSE. FURTHE R THE ISSUE OF INTERPRETATION OF CLAUSE (V) AND AMENDMENT TO SECTION 53A OF THE T RANSFER OF PROPERTY ACT CAME FOR CONSIDERATION BEFORE THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF SURESH CHANDER AGGARWAL VS ITO 48 SOT 2010. THE TR IBUNAL DISCUSSED THIS ISSUE AT PAGE 7 AND AFTER QUOTING THE PROVISIONS OF SECTION 2(47) AND ALSO SECTION 53A BEFORE AND AFTER AMENDMENT AS WALL AS P ARA NOS. 11.1 TO 11.2 OF THE BOARDS CIRCULAR NO. 495 DATED 22.9.1987 OBSERV ED AS UNDER:- THE ABOVE CLEARLY SHOWS THAT THERE WAS CERTAIN SIT UATION WHERE PROPERTIES WERE BEING TRANSFERRED WITH OUT REGISTRATION OF TRANSFER INSTRUMENTS AND PEOPLE WER E ESCAPING TAX LIABILITIES ON TRANSFER OF SUCH PROP ERTIES BECAUSE THE SAME COULD NOT BE BROUGHT IN THE DEFINI TION OF 'TRANSFER' PARTICULARLY IN MANY STATES OF T HE COUNTRY PROPERTIES WERE BEING HELD BY VARIOUS PEOPLE AS LEA SED PROPERTIES WHICH WERE ALLOTTED BY THE VARIOUS G OVT. DEPARTMENTS AND TRANSFERS OF SUCH LEASE WERE NOT PE RMISSIBLE. PEOPLE WERE TRANSFERRING SUCH PROPERTIES BY EXECUTING AGREEMENT TO SELL AND GENERAL POWER OF AT TORNEY AS WELL AS WILL AND RECEIVING FULL CONSIDERA TION, BUT SINCE THE AGREEMENT TO SELL WAS NOT REGISTERED AND THOUGH FULL CONSIDERATION WAS RECEIVED AND EVEN POS SESSION WAS GIVEN, STILL THE SAME TRANSACTIONS COULD NOT BE SUBJECTED TO TAX BECAUSE THE SAME COULD NOT COVERE D BY THE DEFINITION OF 'TRANSFER'. TO BRING SUCH TRANSACTION S WITHIN THE TAX NET, THIS AMENDMENT WAS MADE. IT H AS TO BE APPRECIATED THAT CLAUSE (V) IN SECTION 2(47) DOES N OT LIFT THE DEFINITION OF PART PERFORMANCE FROM SEC TION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. RATHER, IT DEFI NES ANY TRANSACTION INVOLVING ALLOWING OF POSSESSIO N OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS MEANS SUC H TRANSFER IS HOT REQUIRED TO BE EXACTLY SIMILAR TO THE ONE DEFINED U/S.53A OF THE TRANSFER OF PROPERTY ACT, OT HERWISE LEGISLATURE WOULD HAVE SIMPLY STATED THAT T RANSFER WOULD INCLUDE TRANSACTIONS DEFINED IN SEC. 53A OF T HE TRANSFER OF PROPERTY ACT. BUT THE LEGISLATURE IN ITS WISDOM HAS USED THE WORDS 'OF A CONTRACT, OF THE NATURE RE FERRED IN SECTION 53A'. THEREFORE, IT IS ONLY THE N ATURE WHICH HAS TO BE SEEN. AS DISCUSSED ABOVE, THE PURPOSE OF INSERTION OF CLAUSE (V) WAS TO TAX THOSE TRANSACTIO NS WHERE PROPERTIES WERE BEING TRANSFERRED BY WAY OF GIVING POSSESSION AND RECEIVING FULL CONSIDERATION. THEREF ORE, IN OUR HUMBLE OPINION, IN THE CASE OF A TRANSFER WHERE POS SESSION HAS BEEN GIVEN AND FULL CONSIDERATION HAS B EEN RECEIVED, THEN SUCH TRANSACTION NEEDS TO BE CONSTRU ED AS 'TRANSFER'. THEREFORE, THE AMENDMENT MADE IN SECTION 53A BY WHICH THE REQUIREMENT OF REGISTRATION HAS BE EN INDIRECTLY BROUGHT ON THE STATUTE NEED NOT BE AP PLIED WHILE CONSTRUING THE MEANING OF 'TRANSFER' WITH REF ERENCE TO THE INCOME-TAX ACT. 8. THE ABOVE SITUATION FURTHER BECOMES CLEAR IF WE REFER TO THE CELEBRATED DECISION OF HON'BLE SUPREM E COURT IN THE CASE OF PODAR CEMENT (P.) LTD. (SUPRA}. IN THAT CASE, THE ASSESSEE WAS OWNER OF FOUR FLATS IN A BU ILDING CALLED 'SILVER ARCH'/ON NEPEAN SEA ROAD, BOMBAY. OU T OF THESE FOUR FLATS, TWO WERE PURCHASED DIRECTLY FROM THE BUILDERS, MALABAR INDUSTRIES PVT. LTD., AND TWO WERE PURCHASED BY ITS SISTER CONCERNS WHICH WERE L ATER PURCHASED BY THE ASSESSEE. THE POSSESSION OF THE FL ATS WAS TAKEN AFTER FULL PAYMENT OF CONSIDERATION. THE FLATS WERE LET OUT. THE ASSESSEE CONTENDED THAT THE RENTA L INCOME FROM THESE FLATS WAS ASSESSABLE AS 'INCOME FROM OTHER SOURCES' BECAUSE THE ASSESSEE WAS NOT THE LEG AL OWNER BECAUSE THE TITLE OF THE PROPERTY HAD NOT BEEN CONVEYED TO THE CO-OPERATIVE SOCIETY WHICH WAS FORM ED BY THE PURCHASERS OF THE FLATS. THE HON'BLE COUR T NOTED THAT SECTION 27 HAD BEEN AMENDED VIDE CLAUSE 3(A) W HEREIN WHEN A PERSON WAS ALLOWED TO TAKE POSSESSION OF THE BUILDING IN PART PERFORMANCE OF THE NATURE REFE RRED TO IN SECTION 53A, SUCH PERSON SHALL BE DEEMED TO BE THE OWNER. IT WAS FURTHER OBSERVED THAT FOR ALL PRACTIC ABLE PURPOSES THE ASSESSEE WAS THE OWNER AND POSSIB LY THERE CANNOT BE TWO OWNERS OF SAME PROPERTY AT THE SAME T IME. IN FACT, THE AMENDMENTS TO SECTION 27 WERE MAD E LATER ON BUT WERE TAKEN INTO COGNIZANCE ON THE BASI S OF ABOVE PRINCIPLE AND ULTIMATELY IT WAS HELD AS UNDER: 'HENCE, THOUGH UNDER THE COMMON LAW 'OWNER' MEANS A PERSON WHO HAS GOT VALID TITLE LEGALLY CONVEYED TO HIM AFTER COMPLY WITH THE REQUIREMENTS OF LAW SUCH AS T HE TRANSFER OF PROPERTY ACT, THE REGISTRATION ACT, ETC., IN THE CONTEXT SECTION 22 OF THE INCOME-TAX ACT, 1961, H AVING REGARD TO THE GROUND REALITIES AND FURTHER HA VING REGARD TO THE OBJECT OF THE INCOME-TAX ACT, NAMELY, TO TAX THE INCOME, 'OWNER' IS A PERSON WHO IS ENTITLED T O RECEIVE 19 INCOME FROM THE PROPERTY IN HIS OWN RIGHT. THE REQU IREMENT OF REGISTRATION OF THE SALE DEED IN THE CON TEXT OF SECTION 22 IS NOT WARRANTED.' THUS, FROM THE ABOVE, IT IS CLEAR THAT IT IS NOT NE CESSARY TO GET THE INSTRUMENT OF TRANSFER REGISTERE D FOR THE PURPOSE OF INCOME-TAX ACT WHEN A PERSON HAS GOT A V ALID LEGALLY CONVEYED AFTER COMPLYING WITH THE REQUIREMENTS OF THE LAW. 9. SIMILARLY, IN THE CASE OF MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775/106 TAXMAN 166 (SC), THE ASSESSEE HAD PURCHASED FOR THE USE OF ITS STAFF SEV EN LOW INCOME GROUP HOUSES FROM A HOUSI NG BOARD. THE PAYMENT HAD BEEN MADE AND IN TURN POSSESSION OF THE HOUSES WAS TAKEN OVER BY THE ASSESSEE. THE ACT UAL CONVEYANCE DEED WAS NOT EXECUTED. THE ASSESSEE CLAI MED DEPRECIATION WHICH WAS DENIED BY THE DEPARTMENT . AFTER GREAT DISCUSSION, IT WAS OBSERVED THAT FOR AL L PRACTICABLE PURPOSES AND FOR THE PURPOSE OF INCOM E-TAX ACT, THE ASSESSEE SHALL BE CONSTRUED AS OWNER OF THE PRO PERTY. IN FACT, IT WAS HELD AS UNDER: - 'HELD, REVERSING THE JUDGMENT OF THE HIGH COURT, TH AT THE FINDING OF FACT ARRIVED AT IN THE CASE AT HA ND WAS THAT THOUGH A DOCUMENT OF TITLE WAS NOT EXECUTED BY THE HOUSING BOARD IN FAVOUR OF THE ASSESSEE, THE HOUSES WERE ALLOTTED TO THE ASSESSEE BY THE HOUSING BOARD, PA RT PAYMENT RECEIVED AND POSSESSION DELIVERED SO AS TO CONFER DOMINION OVER THE PROPERTY ON THE ASSESSEE W HEREAFTER THE ASSESSEE HAD IN ITS OWN RIGHT ALLOTTE D THE QUARTERS TO THE STAFF AND THEY WERE BEING ACTUALLY USED BY THE STAFF OF THE ASSESSEE. THE ASSESSEE WAS ENTITLED TO DEPRECIATION IN RESPECT OF THE SEVEN HOUSES IN R ESPECT OF WHICH THE ASSESSEE HAD NOT OBTAINED A DEE D OF CONVEYANCE FROM THE VENDOR ALTHOUGH IT HAD TAKEN PO SSESSION AND MADE PART PAYMENT OF THE CONSIDERATION '. THUS, FROM THE ABOVE TWO DECISIONS, IT BECOMES ABSO LUTELY CLEAR THAT FOR THE PURPOSE OF THE INCOME-TAX ACT THE GROUND REALITY HAS TO BE RECOGNIZED AND IF ALL THE INGREDIENTS OF TRANSFER HAVE BEEN COMPLETED, TH EN SUCH TRANSFER HAS TO BE RECOGNIZED. MERELY BECAUSE THE P ARTICULAR INSTRUMENT OF TRANSFER HAS NOT BEEN REGIS TERED WILL NOT ALTER THE SITUATION. THIS POSITION IS FURTHER S TRENGTHENED BY THE FACT THAT LEGISLATURE ITSELF HAS INSERTED CLAUSE (V) TO SECTION 2(47) AND WHILE REFERRING TO THE PRO VISIONS OF SECTION 53A, REFERENCE HAS BEEN MADE BY STATING THAT CONTRACTS IN THE NATURE OF SECTION 53A SHOULD ALSO BE COVERED BY THE DEFINITION OF 'TRANSFER'. THEREF ORE, IN OUR HUMBLE VIEW, THE AMENDMENT TO SEC. 53A OF THE TRANS FER OF PROPERTY ACT, WHEREBY THE REQUIREMENT OF THE DOCUMENTS NOT BEING REGISTERED HAS BEEN OMITTED, WI LL NOT ALTER THE SITUATION FOR HOLDING THE TRANSACT ION TO BE A TRANSFER U/S.2(47)(V) IF ALL OTHER INGREDIENTS HAVE BEEN SATISFIED. 74 THUS, IT IS CLEAR THAT NON REGISTRATION OF AGREE MENT CANNOT LEAD TO THE CONCLUSION THAT PROVISION OF SECTION 2(47) (V) IS N OT APPLICABLE. SIMILAR VIEW HAS BEEN TAKEN BY ITAT COCHIN BENCH OF THE TRIBUNAL IN CASE OF G.SREENIVASAN VS DCIT 28 TXMANN.COM 200 (COCH.) AND ITAT PUNE BEN CH IN THE CASE OF MAHESH NEMICHANDRA GANESHWADE V ITO 21 TAXMANN.COM 136 (PUNE). IN VIEW OF THIS LEGAL POSITION, THIS CONTENTION IS REJECTED . 75 THE NEXT CONTENTION WAS THAT THE DECISION OF HON 'BLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IS NOT APPLICABLE PARTICU LARLY BECAUSE ULTIMATELY IN THAT CASE IT WAS HELD T HAT CAPITAL GAIN TAX SHOULD BE CHARGED IN ASSESSMENT YEAR 1999- 2000 WHEREAS AGREEMENT WAS EXECUTED IN AUGUST, 1994 . 76 WE HAVE ALREADY DISCUSSED THE IMPLICATIONS OF TH E DECISION IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IN PARA 33 TO 38. WE HAD ALSO EXAM INED WHY IN THAT CASE CAPITAL GAIN WAS NOT HELD TO BE CHARGEABLE IN ASSESSMENT YEAR 1995-96.THERE IS NO N EED TO REPEAT THE SAME AND IN VIEW OF THE SAID OBSERVATIONS, WE REJECT THIS CONTENTION. 77 THE NEXT CONTENTION IS THAT IT IS NECESSARY FOR INVOKING OF SECTION 2(47)(V) OF THE ACT TO COMPLY WITH THE PROVISIONS O F SECTION 53A OF THE TRANSFER OF PROPERTY ACT TO THE EXTENT THAT THERE SHOULD BE WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM HIS PART OF THE CONTRACT. 78 IN THIS ASPECT WE HAVE NO QUARREL WITH THE PROPOSITION THAT FOR INVOKING SECTION 53A PF T.P. ACT READ WITH CLAUSE (V) OF SEC TION 2(47), THE TRANSFEREE HAS TO PERFORM OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. IN THIS RESPECT AS REFERRED TO BY LD. COUNSEL FOR THE ASSESSEE, THE COMMENTS OF THE LD. AUTHOR IN THE COMMENTARY BY MULLA DINSHAN FREDERI CK MULLA VIDE PARA 16 ARE CLEAR AND SHOWS THAT THIS REQUIREMENT HAS TO BE ABS OLUTE AND UNCONDITIONAL. SOME OBSERVATIONS HAVE BEEN MADE IN THE CASE OF GEN ERAL GLASS COMPANY PVT LTD VS DCIT (SUPRA). IN THAT CASE IT WAS HELD THAT WILLINGNESS TO PERFORM FOR THE PURPOSE OF SECTION 53A IS SOMETHING MORE THAN A STATEMENT OF INTENT AND IT IS UNQUALIFIED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM HIS OBLIGATION. IN THAT CASE THE TRANSFERE E HAS AGREED TO MAKE CERTAIN PAYMENTS IN INSTALLMENTS IN CONSIDERATION OF THE DE VELOPMENT AGREEMENT BUT SUCH PAYMENTS WERE NOT MADE. LATER ON, THE AGREEME NT WAS MODIFIED AND MORE TIME WAS GIVEN TO THE TRANSFEREE FOR PAYMENT O F SUCH INSTALLMENTS. HOWEVER, THE INSTALLMENTS WERE NOT PAID EVEN UNDER THE MODIFIED TERMS AND THAT IS WHY IT WAS ULTIMATELY HELD THAT SUCH AGREEM ENT CANNOT BE CONSTRUED AS TRANSFER. 79 THE SECOND DECISION REFERRED TO BY LD. COUNSEL F OR THE ASSESSEE IS K. RADIKA V DCIT (SUPRA). IN THIS CASE, SIMILAR OBSER VATIONS WERE MADE, THOUGH IT IS NOT POINTED OUT IN WHAT RESPECT THE TRANSFERE E HAS FAILED TO PERFORM HIS PART BUT IT HAS BEEN OBSERVED THAT THE FACTS OF THE CASE SHOWS THAT TRANSFEREE HAS NOT PERFORMED HIS PART OF THE CONTRACT. 80 THE THIRD JUDGMENT RELIED UPON BY THE LD. COUNSE L FOR THE ASSESSEE IS IN THE CASE OF DCIT V TEJ SINGH (SUPRA). IN THAT C ASE LAND WAS ACQUIRED BY THE 20 GOVERNMENT AND THE MATTER WENT FOR LITIGATION. DURI NG THE PENDENCY OF LITIGATION, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH A DEVELOPER FOR THE PURPOSE OF DEVELOPMENT OF THE PRO PERTY, HOWEVER, IT WAS CLARIFIED IN THE AGREEMENT THAT THERE IS LITIGATION IN RESPECT OF ACQUISITION OF PROPERTY AND THE DEVELOPER HAS TO TAKE CLEARANCE FR OM THE GOVERNMENT IN THE MATTER OF DENOTIFICATION OF THE LAND. IT WAS HELD THAT SINCE THE LAND WAS UNDER COMPULSORY ACQUISITION AND NO COMPENSATION HAS BEE N RECEIVED, THEREFORE, THERE COULD NOT BE ANY CAPITAL GAIN TAX U/S 2(47) ( III) WHICH DEALS WITH THE COMPULSORY ACQUISITION. IT WAS FURTHER OBSERVED TH AT ASSESSEE COULD NOT HAVE GIVEN POSSESSION UNLESS AND UNTIL THE LAND WAS DENO TIFIED. SINCE FACTS OF THE CASE ARE DIFFERENT THAN THE CASE IN HAND AND THEREF ORE, SAME ARE NOT RELEVANT FOR OUR PURPOSE. 81 NOW COMING TO THE FACTS, FIRSTLY IT WAS CONTENDE D THAT DEVELOPER I.E TRANSFEREE HAS NOT OBTAINED VARIOUS PERMISSIONS WH ICH WERE REQUIRED TO BE TAKEN BY THE DEVELOPER AS PER CLAUSES 3.1, 7.9, 8.4 AND 8.6 OF THE JDA. THIS IS NOT CORRECT AS POINTED OUT BY THE LD. CIT DR THA T ASSESSEE HAD ALREADY GOT THE MUNICIPAL PLAN SANCTIONED BUT IN THE MEANTIME P IL WAS FILED BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AGAINST THE IM PLEMENTATION OF THE PROJECT. INITIALLY, THE CONSTRUCTION WAS BANNED BY THE HON'BLE HIGH COURT. HOWEVER, LATER ON IT WAS OBSERVED IN THE CWP NO. 20 425 OF 2010 AND AS CLARIFIED BY THE ORDER OF THE HON'BLE SUPREME COURT THAT REFUSAL OF SANCTION UNDER THE ENVIRONMENT (PROTECTION) ACT, THE SOCIETY HAVE SOUGHT A REVIEW OF THE ORDER BECAUSE THE FINDINGS ARRIVED WERE EX.PAR TE. NO ORDER IN THE MATTER HAS BEEN PASSED BY THE COMPETENT AUTHORITY PERHAPS BECAUSE OF THE ORDER OF HIGH COURT. IN THE INTERIM ORDER PASSED IN THE PI L IT HAS BEEN CLARIFIED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 31.1.201 2 PERMITTING THE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GO VERNING THE MATTER TO THEIR RESPECTIVE JURISDICTION TO BE DECIDED IN ACCORDANCE WITH LAW. THUS, IT BECOMES CLEAR THAT DEVELOPER I.E. THDC HAS APPLIED FOR VARI OUS PERMISSIONS BEFORE THE RELEVANT AUTHORITIES AND IN SOME CASES PERMISSION W ERE DECLINED ON EX.PARTE BASIS AND IN SOME CASES THE SAME WERE DECLINED IN V IEW OF THE HIGH COURT ORDER BANNING THE CONSTRUCTION. AFTER THE CLARIFICA TION OF THE ORDER OF THE HIGH COURT BY HON'BLE SUPREME COURT BY ORDER DATED 31.1. 2012, THE AUTHORITIES HAVE ALREADY BEEN PERMITTED TO EXAMINE THE ISSUE ON MERITS UNDER VARIOUS LAWS. FURTHER IN THE JDA THERE IS A CLAUSE 26 WHICH DEALS WITH THE FORCE MAJEURE CLAUSES. THE CLAUSE 26 (I) TO (V) READS AS UNDER:- FORCE MAJEURE I) NONE OF THE PARTIES SHALL BE LIABLE TO THE OTHER PARTY OR BE DEEMED TO BE IN BREACH OF THIS AGREEMENT BY REASONS OF ANY DELAY IN PERFORMING OR ANY FAILURE TO PERFORM, ANY OF ITS OWN OBLIGATIONS IN RELATION TO THE AGREEMENT, IF THE DELAY OR FAILURE IS DUE TO ANY EVENT OF FORCE MEJEURE. E VENT OF FORCE MAJEURE IS ANY EVENT CAUSED BEYOND THE PARTIES REASONABLE CONTROL. THE FOLLOWING SHALL BE REGARDED AS ISSUES BEYOND THE PARTIES REASONABLE CO NTROL. II) FOR THE PURPOSES OF THIS CLAUSE, AN EVENT OF FO RCE MAJEURE SHALL MEAN EVENTS OF WAR, WAR LIKE CONDITIONS, BLOCKADES, EMBA RGOES, INSURRECTION, GOVERNMENTAL DIRECTIONS, RIOTS, STRIKES, ACTS OF TE RRORISM, CIVIL COMMOTION, LOCK-OUTS, SABOTAGE, PLAGUES OR OTHER EPIDEMICS, AC TS OF GOD INCLUDING FIRE, FLOODS, VOLCANIC ERUPTIONS, TYPHOONS, HURRICANES, S TORMS, TIDAL WAVES, EARTHQUAKE, LANDSLIDES, LIGHTNING, EXPLOSIONS AND O THER NATURAL CALAMITIES, PROLONGED FAILURE OF ENERGY, COURT ORDERS / INJUNCT IONS, CHARGE OF LAWS, ACTION AND / OR ORDER BY STATUTORY AND / OR GOVERNMENT AUT HORITY, THIRD PARTY ACTIONS AFFECTING THE DEVELOPMENT OF THE PROJECT, ACQUISITI ON / REQUISITION OF THE PROPERTY OR ANY PART THEREOF BY THE GOVERNMENT OR A NY OTHER STATUTORY AUTHORITY AND SUCH CIRCUMSTANCES AFFECTING THE DEVELOPMENT OF THE PROJECT (EVENT OF FORCE MAJEURE). III) ANY PARTY CLAIMING RESTRICTION ON THE PERFORMA NCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT DUE TO THE HAPPENING OR ARISIN G OF AN EVENT OF FORCE MAJEURE HEREOF SHALL NOTIFY THE OTHER PARTY OF THE HAPPENING OR ARISING AND THE ENDING OF CEASING OF SUCH EVENT OR CIRCUMSTANCE WIT H THREE (3) DAYS OF DETERMINING THAT AN EVENT OF FORCE MAJEURE HAS OCCU RRED. IN THE EVENT ANY PARTY ANTICIPATES THE HAPPENING OF AN EVENT OF FORC E MAJEURE, SUCH PARTY SHALL PROMPTLY NOTIFY THE OTHER PARTY. IV) THE PARTY CLAIMING EVENT OF FORCE MAJEURE CONDI TIONS SHALL, IN ALL INSTANCES AND TO THE EXTENT IT IS CAPABLE OF DOING SO, USE ITS BEST EFFORTS TO REMOVE OR REMEDY THE CAUSE THEREOF AND MINIMIZE THE ECONOMIC DAMAGE ARISING THEREOF. V) EITHER PARTY MAY TERMINATE THIS AGREEMENT AFTER GIVING THE OTHER PARTY A PRIOR NOTICE OF FIFTEEN (15) DAYS IN WRITING OF THE EVENT OF FORCE MAJEURE CONTINUES FOR PERIOD OF NINETY (90) DAYS. IN THE EVENT OF TERMINATION OF THIS AGREEMENT ALL OBLIGATIONS OF THE PARTIES UNTIL SUCH DATE SHALL BE FULFILLED. 82 THE COMBINED READING OF THESE CLAUSES SHOW THAT IF ANY OF THE PARTY COULD NOT PERFORM ITS PART OF THE OBLIGATION BECAUS E OF THE UNFORESEEN CIRCUMSTANCES WHICH INCLUDED GOVERNMENT DIRECTIONS, COURT ORDERS, INJUNCTIONS ETC. SUCH PARTY WOULD NOT BE LIABLE TO OTHER PARTY. IN VIEW OF FORCE MAJEURE CLAUSE WHICH INCLUDED COURT INJUNCTION IT CAN NOT B E SAID THAT THDC IS NOT WILLING TO PERFORM ITS OBLIGATION. IN FACT DEVELPE RS I.E. THDC/HASH WERE PERUSING THE ISSUE OF PERMISSIONS/SANCTIONS VIGOROU SLY. THESE ASPECTS BECOME FURTHER CLEAR IF THE JUDGMENT OF THE HON'BLE PUNJA B & HARYANA HIGH COURT IN CWP NO. 20425 OF 2010 VIDE ORDER DATED MARCH 26, 20 12 IS PERUSED. PARAS 3, 4, 22, 25 & 26 OF THE JUDGMENT READ AS UNDER:- 21 3. THE BROAD CONTOURS OF THE PRESENT PROCEEDING HA VING BEEN OUTLINED, WE MAY NOW PROCEED TO TAKE NOTE OF THE SPECIFIC CONTEN TIONS OF THE CONTESTING PARTIES AS MADE BEFORE US. HOWEVER, BEFORE WE DO SO , IT MAY BE APPROPRIATE TO MENTION THE SOMEWHAT CONFLICTING STAND OF THE PARTI ES WITH REGARD TO THE PRESENT STAGE OF THE APPLICATIONS FILED UNDER THE P ROVISIONS OF THE ENVIRONMENT (PROTECTION) ACT AS WELL AS THE WILD LIFE (PROTECTI ON) ACT. WHILE THE PETITIONER, WHO IS SUPPORTED BY THE RESPONDENT NO.6-CHANDIGARH ADMINISTRATION, ASSERTS THAT NECESSARY SANCTION/PERMISSION UNDER BOTH THE A CTS HAVE BEEN REFUSED BY ORDERS PASSED BY THE COMPETENT AUTHORITIES, THE PRO MOTERS OF THE PROJECT CONTEND TO THE CONTRARY. THE FACTS, AS UNFOLDED BEF ORE US, INDICATE THAT AGAINST THE REFUSAL OF SANCTION UNDER THE ENVIRONME NT (PROTECTION) ACT, THE RESPONDENTS HAVE SOUGHT A REVIEW OF THE ORDER ON TH E GROUND THAT THE FINDINGS ARRIVED AT, WHICH HAVE FORMED THE BASIS OF THE REFU SAL, ARE EX-PARTE. NO ORDER IN THE REVIEW MATTER HAS BEEN PASSED BY THE COMPETE NT AUTHORITY, PERHAPS, BECAUSE OF THE INTERIM ORDER PASSED IN THE PIL WHIC H HAS BEEN CLARIFIED BY THE HON'BLE SUPREME COURT BY ORDER DATED 31.1.2012 PERM ITTING THE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GOVERNING TH E MATTER TO EXERCISE THEIR RESPECTIVE JURISDICTIONS IN ACCORDANCE WITH LAW. IN SOFAR AS THE WILD LIFE (PROTECTION) ACT IS CONCERNED, IT APPEARS THAT THE REJECTION HAS BEEN MADE BY THE CHIEF WILD LIFE WARDEN WHO, THE RESPONDENTS CLA IM, IS MERELY A RECOMMENDING AUTHORITY AND IS REQUIRED TO FORWARD H IS RECOMMENDATION TO THE CENTRAL GOVERNMENT. AS THE REJECTION UNDER THE WILD LIFE (PROTECTION) ACT HAS BEEN MADE BY AN AUTHORITY NOT COMPETENT TO DO, THE PROMOTERS OF THE PROJECT HAVE SOUGHT A REVIEW OF THE ORDER WHICH IS STILL PE NDING FOR THE SAME REASON(S) AS NOTICED ABOVE. 4. ON THESE FACTS WE ARE OF THE VIEW THAT IT WOULD BE PRUDENT ON OUR PART TO TAKE THE VIEW THAT THE ISSUE WITH REGARD TO CLEARAN CE/SANCTION UNDER THE TWO ENACTMENTS I.E. ENVIRONMENT (PROTECTION) ACT AND WI LD LIFE (PROTECTION) ACT IS PRESENTLY PENDING AND AS THE PROMOTERS OF THE PROJE CT HAVE SUBMITTED THEMSELVES TO THE JURISDICTION OF THE AUTHORITIES U NDER THE SAID ENACTMENTS WE SHOULD REFRAIN FROM ADDRESSING OURSELVES ON ANY OF THE ISSUES CONNECTED WITH EITHER OF THE TWO STATUTORY ENACTMENTS AS ANY SUCH EXERCISE, EVEN THOUGH MAY BE UNINTENDED, MAY HAVE THE EFFECT OF FETTERING THE JURISDICTION OF STATUTORY AUTHORITIES FUNCTIONING UNDER THE TWO RELEVANT STAT UTES. 22. INSOFAR AS THE PROVISIONS OF THE ENVIRONMENT (P ROTECTION) ACT AND THE WILD LIFE (PROTECTION) ACT ARE CONCERNED, IT NEED NOT BE EMPHASISED THAT EVERY PROJECT ATTRACTING THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND/OR THE PROVISIONS OF THE 1995 ACT MUST SATISFY THE ECOLOGI CAL CONCERNS OF THE AREA IN THE LIGHT OF THE PROVISIONS OF THE TWO STATUES IN Q UESTION. AS ALREADY HELD BY US, A PUBLIC TRUST HAS BEEN BESTOWED ON THE AUTHORI TIES BY PROVISIONS OF THE SAID ACTS WHICH CAST ON SUCH AUTHORITIES A DUTY TO INTERDICT ANY PROJECT OR ACTIVITY WHICH EVEN REMOTELY SEEMS TO CREATE AN IMB ALANCE IN THE PRISTINE ECOLOGY AND ENVIRONMENT OF THE AREA ON WHICH THE CI TY OF CHANDIGARH IS SITUATED OR FOR THAT MATTER IN THE IMMEDIATE VICINI TY THEREOF. AS ALREADY OBSERVED, NECESSARY CLEARANCES UNDER THE AFORESAID TWO ENACTMENTS, INSOFAR AS THE RESPONDENTS ARE CONCERNED, ARE PRESENTLY PEN DING BEFORE THE CONCERNED AUTHORITIES AND, THEREFORE, IT WOULD BE HIGHLY INCO RRECT ON OUR PART TO ENTER INTO ANY FURTHER DISCUSSION ON THE AFORESAID ASPECT OF THE CASE. 25. WE ALSO HASTEN TO EMPHASISE THAT A MORE RIGOROU S REGULATED DEVELOPMENT IN WHAT ARE NOW THE REMNANTS OF THE PERIPHERY AND T HE AREAS ADJOINING TO IT IS THE NEED OF THE HOUR FOR WHICH THE STAKEHOLDERS I.E . THE ADMINISTRATION OF CHANDIGARH, THE STATES OF PUNJAB AND HARYANA AS ALS O THE AUTHORITIES UNDER THE ENVIRONMENT (PROTECTION) ACT AND THE WILD LIFE PROTECTION ACT HAVE TO DEMONSTRATE THE NEED TO ENGAGE THEMSELVES INTENSIVE LY AND NOT ACQUIRE A PLACID APPROACH INDICATING AN ELOQUENT ACQUIESCENCE TO THE VIOLATION OF THE 1995 ACT, PERIPHERY CONTROL ACT AND THE PERIPHERY P OLICY. 26. WE THUS CONCLUDE ON THE AFORESAID NOTE BY HOLDI NG AND OBSERVING THAT THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND THE 199 5 ACT ARE COMPLEMENTARY TO EACH OTHER AND THE PROVISIONS OF THE TWO STATUTES W OULD APPLY TO THE HOUSING PROJECT IN QUESTION. THE RESPONDENTS, THEREFORE, WI LL HAVE TO COMPLY WITH ALL THE REQUIREMENTS SPELT OUT BY BOTH THE AFORESAID ST ATUTES. AS THE REQUIREMENT OF CLEARANCES UNDER THE WILD LIFE (PROTECTION) ACT AND ENVIRONMENT (PROTECTION) ACT IS NOT A CONTENTIOUS ISSUE, AND AS WE HAVE ALREADY HELD THAT THE PROCESS OF GRANT OF SUCH CLEARANCES IS PENDING BEFORE THE APPROPRIATE AUTHORITIES UNDER THE RESPECTIVE ACTS, THE SAME WIL L NOW HAVE TO BE BROUGHT TO ITS LOGICAL CONCLUSION KEEPING IN MIND OUR OBSERVAT IONS AND DIRECTIONS CONTAINED HEREINABOVE. 83 THE COMBINED READING OF THE ABOVE PARAS IN THE O RDER OF HON'BLE HIGH COURT CLEARLY SHOWS THAT DEVELOPER THDC/ HASH I.E. TRANSFEREE HAVE MADE THEIR SINCERE EFFORTS FOR OBTAINING THE NECESSARY P ERMISSIONS / SANCTIONS WHICH WERE REQUIRED UNDER THE JDA. HOWEVER, SOME OF THE SANCTIONS COULD NOT BE TAKEN IN TIME BECAUSE OF THE LITIGATION BY WAY OF P IL BUT SINCE NONE OF THE PARTY WAS LIABLE TO THE OTHER PARTY IN VIEW OF THE CLAUSE 26 DEALING WITH FORCE MAJEURE IT CANNOT BE SAID THAT DEVELOPER WAS NOT WILLING TO PERFORM HIS PART OF CONTRACT. IN ANY CASE NO SPECIFIC EVID ENCE HAS BEEN SHOWN US TO PROVE THAT THDC / HASH WERE DECLINING TO PERFORM PA RTICULAR OBLIGATION PROVIDED IN JDA. IN VIEW OF THIS DISCUSSION, IT CA NNOT BE SAID THAT TRANSFEREE I.E. DEVELOPER THDC/HASH IS NOT WILLING TO PERFORM HIS PART OF CONTRACT. 22 84 SECONDLY, IT WAS CONTENDED THAT PAYMENTS HAVE NOT BEEN MADE AS PER THE JDA. HOWEVER, AGAIN THIS IS NOT CORRECT. AS PE R CLAUSE 4(IV) OF THE JDA, THE INSTALLMENT FOR RS. 31,92,75,000/- WAS REQUIRED TO BE PAID. THE CLAUSE 4(IV) READ AS UNDER:- IV) PAYMENT BEING RS. 31,92,75,000/- (RUPEES ONE C RORE NINETY TWO LACS SEVENTY FIVE THOUSAND ONLY) CALCULATED @ RS. 24,75, 000/- (RS. TWENTY FOUR LACS SEVENTY FIVE THOUSAND ONLY) PER PLOT HOLDER OF 500 SQ. YARDS AND (RS. 49,50,000/- (RS. FORTY NINE LACS FIFTY THOUSAND ONL Y) AS PER PLOT HOLDER OF 1000 SQUARE YARDS TO BE MADE TO THE OWNER AND / OR THE R ESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) WITHIN SIX(6) MONTHS FRO M THE DATE OF EXECUTION OF THIS AGREEMENT OR WITHIN TWO (2) MONTHS FROM THE D ATE OF APPROVAL OF THE PLANS / DESIGN AND DRAWINGS AND GRANT OF THE FINAL LICENC E TO DEVELOP WHERE UPON THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER, AGAINST WHICH THE OWNER SHALL EXECUTE A REGISTERED SALE DEED FOR LAND OF EQ UIVALENT VALUE BEING 6.36 ACRES OUT OF THE PROPERTY AS DEMARCATED IN GREEN CO LOUR (ALSO HATCHED IN GREEN COLOUR) IN THE DEMARCATION PLAN ANNEXED HERET O AS ANNEXURE V AND BEARING KHASRA NOS. 123/15, 123/6, 123/7 (BALANCE P ART), 123/3 (PART), 123//4//1, 123///4//1/2, 123//4/2, 123/5/1, 123//5/ 2, 123//5/3, 112/24/24 (PART) 85 THE CAREFUL READING OF THE SAID CLAUSE OF THE JD A WOULD SHOW THIS PAYMENT WAS REQUIRED TO BE MADE WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF EXECUTION OF THIS AGREEMENT OR WITHIN TWO MONTHS FROM THE DATE OF APPROVAL OF PLAN / SANCTION AND DRAWING GRANT OF FINAL LICEN SE TO DEVELOP WHERE UPON THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER. THUS , THIS INSTALLMENT WAS DEPENDENT ON TWO CONTINGENCIES FIRST THE EXPIRATION OF A PERIOD OF SIX MONTHS FROM THE DATE OF AGREEMENT OR ALTERNATIVELY ON THE EXPIRATION OF A PERIOD OF TWO MONTHS FROM THE DATE OF APPROVAL OF PLANS / DESIGN S DRAWING ETC. LEADING TO GRANT OF FINAL LICENSES WHICH CAN LEAD TO COMMENCEM ENT OF CONSTRUCTION, WHICHEVER IS LATER. THE MATTER WAS TAKEN UP BY WAY OF PIL BY CERTAIN CITIZENS AND ADMINISTRATION OF THE UNION TERRITORY BEFORE TH E HON'BLE HIGH COURT WHICH INITIALLY STAYED THE SANCTION OF SUCH PLAN ETC. TH IS LED TO SITUATION WHERE CONSTRUCTION COULD NOT BE COMMENCED AND HENCE PAYME NT WAS NOT REQUIRED TO BE MADE IN VIEW OF THE PENDING LITIGATION. THE CLA USES OF FORCE MAJEURE CAME INTO OPERATION AND THEREFORE, IT CANNOT BE SAID TH AT THE DEVELOPER IS NOT WILLING TO PERFORM ITS PART OF THE CONTRACT. IN AN Y CASE THERE IS NO DEFAULT ON THE PART OF THE DEVELOPER AS PAYMENT WAS NOT YET DU E AS PER CLAUSE 4(I)(IV) OF JDA. 86 THIS POSITION WAS INFORMED TO THE SOCIETY BY LET TER DATED 4.2.2011 BY HASH BUILDER, COPY OF WHICH HAS BEEN FILED AT PAGES 23 & 24 OF THE PAPER BOOK DEALING WITH THE ADDITIONAL EVIDENCE. THROUGH THIS LETTER IT HAS BEEN CLEARLY STATED THAT SINCE PERMISSION IS PENDING FRO M THE MINISTRY OF ENVIRONMENT AND FOREST DEPARTMENT AND THEREFORE CON STRUCTIONS COULD NOT COMMENCE. THESE PERMISSIONS WERE PENDING BECAUSE O F THE PIL FILED BY SHRI AALOK JAGGA BEFORE THE HON'BLE PUNJAB & HARYANA HIG H COURT. ALL THESE FACTS CLEARLY SHOWS THAT IN VIEW OF CLAUSE 4.1(IV) READ W ITH CLAUSE 26(V) OF THE JDA, HASH BUILDER WERE NOT REQUIRED TO MAKE THE PAYMENT AND IT CANNOT BE SAID THAT THEY WERE NOT WILLING TO PERFORM THEIR PART OF THE CONTRACT ON THIS ASPECT. THEREFORE, THIS CONTENTION IS REJECTED. 87 SEVENTH CONTENTION IS THAT REVENUE WRONGLY HELD THAT EVEN CLAUSE (VI) OF SECTION 2(47) IS APPLICABL E. WE FIND NO FORCE IN THIS CONTENTION. CLAUSE (VI) T O SECTION 2(47) READS AS UNDER: ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMB ER OF, OR ACCRUING SHARES IN, A COOPERATIVE SOCIETY , COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY O F ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFER RING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. 88 THE PLAIN READING OF THE PROVISION SHOWS THAT AN Y TRANSACTION BY WAY OF BECOMING A MEMBER OR ACQUIRING SHARES IN THE COOPERATIVE SOCIETY OR SHAR ES IN THE COMPANY WHICH HAS THE EFFECT OF TRANSFER RING OR ENABLING THE ENJOYMENT OF ANY IMMOVEABLE PROPERTY W OULD BE COVERED BY THE DEFINITION OF TRANSFER. IN THE CASE BEFORE US, INITIALLY THE MEMBERS OF THE SOCIETY WER E HOLDING SHARES IN THE SOCIETY FOR OWNERSHIP OF PL OT OF 500 SQYD OR 1000 SQYD. THIS MEMBERSHIP WAS SURRENDERED TO THE SOCIETY VIDE RESOLUTION OF THE SOCIETY PASS ED IN THE EXECUTIVE COMMITTEE ON 4.1.2007 WHICH WAS LATER RATIFIED IN THE GENERAL BODY MEETING OF THE SOCIET Y ON 25.1.2007, SO THAT THE SOCIETY COULD ENTER INTO JDA . IN THE JDA THE SOCIETY HAS AGREED TO TRANSFER TH E LAND. THEREFORE, TECHNICALLY IT CAN BE SAID THAT THE DEV ELOPER I.E. THDC/HASH HAS PURCHASED THE MEMBERSHIP OF THE MEMBERS IN THE SOCIETY WHICH WOULD LEAD TO ENJOYMEN T OF THE PROPERTY AND IN THAT TECHNICAL SENSE, CLAU SE (VI) OF SECTION 2(47) IS APPLICABLE. 89 EIGHTH CONTENTION IS THAT SINCE THE SOCIETY HAS TRANSFERRED THE LAND THROUGH JDA ON A PRO-RATA BASI S, THEREFORE, ONLY WHATEVER MONEY IS RECEIVED AGAINST WHICH SALE DEEDS HAVE ALSO BEEN EXECUTED, CAN BE T AXED AND NOTIONAL INCOME I.E. THE MONEY TO BE RECEIVED L ATER, CAN NOT BE TAXED. IN THIS REGARD RELIANCE WA S PLACED ON CERTAIN SUPREME COURT DECISIONS AND OTHER CASES FOR THE PROPOSITION THAT NOTIONAL INCOME CANNOT BE TAX ED. THERE IS NO NEED TO DISCUSS THE CASES RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE BECAUSE IT IS SETTL ED POSITION OF LAW THAT NO NOTIONAL INCOME CAN BE TAXED. THOUGH THERE IS NO QUARREL THAT IT IS A SETTLED PRINCIPLE OF LAW THAT NOTIONAL INCOME CAN NOT BE TAXED BUT IN CASE OF CAP ITAL GAIN, SECTION 45 WHICH IS CHARGING SECTION AND SECTION 48 WHICH IS COMPUTATION SECTION, MAKES IT ABSOLUTEL Y CLEAR THAT RIGOR OF TAX IN CASE OF CAPITAL GAIN W OULD COME INTO PLAY ON THE TRANSFER OF CAPITAL ASSET AND TOTA L CONSIDERATION WHICH IS ARISING ON SUCH TRANSFER, HAS TO BE TAXED. SECTION 48 CLEARLY TALKS ABOUT FULL CONSIDE RATION RECEIVED OR ACCRUING AS RESULT OF TRANSFER. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARAS 64 TO 68. 23 90 SECOND ASPECT OF THIS CONTENTION WAS THAT IF CON SIDERATION WHICH HAS NOT BEEN RECEIVED WAS TO BE TAXED THEN THE ASSESSEE WOULD BE DEPRIVED FOR CLAIMING EXEMPTION U/S 54 AND 54EC. AS OBSERVED AB OVE AS PER SECTION 45 R.W.S 48 WHOLE OF THE CONSIDERATION, RECEIVED OR AC CRUED HAS TO BE TAXED. EVERY PERSON IS SUPPOSED TO KNOW THE LAW AND IF THE TRANSACTION IS STRUCTURED IN SUCH A WAY FOR THE TRANSFER OF CAPITAL ASSET TH AT SOME OF THE CONSIDERATION WOULD BE RECEIVED LATER THEN SUCH PERSON IS SUPPOSE D TO KNOW THE CONSEQUENCES OF THE DENIAL OF SUCH BENEFITS. HOWEVE R, IF THE SECTION IS INTERPRETED IN THE MANNER SUGGESTED BY THE LD. COUN SEL OF THE ASSESSEE THEN NO PERSON WOULD PAY CAPITAL GAIN TAX ON TRANSFER O F A PROPERTY. THIS WILL BE CLEAR FROM A SIMPLE EXAMPLE. LET US ASSUME IF A S ELLS THE PROPERTY TO B FOR A CONSIDERATION OF RS. 100 CRORES AND RECEIVE ONLY A CONSIDERATION OF 1.00 CRORE AND IT IS MENTIONED IN THE TRANSFER INSTRUMEN T THAT BALANCE OF CONSIDERATION WOULD BE PAID AFTER 20 YEARS THEN NO TAX CAN BE LEVIED ON SUCH BALANCE CONSIDERATION OF RS. 99.00 CRORES WHICH HAS NOT BEEN RECEIVED AS PER THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE . BUT IN THAT CASE NO TAXES CAN BE LEVIED EVEN AFTER 20 YEARS BECAUSE NO TRANSF ER CAN BE SAID TO HAVE TAKEN PLACE AFTER 20 YEARS AND REVENUE CANNOT DO AN Y THING BECAUSE CAPITAL GAIN CAN BE CHARGED U/S 45 ONLY ON TRANSFER OF CAPI TAL ASSET. WE DO NOT THINK THAT THIS KIND OF INTERPRETATION CAN BE MADE WHILE INTERPRETING SECTION 45 R.W.S. 48 BY INVOKING THE RULE THAT THERE CAN NOT B E ANY TAX ON NOTIONAL RECEIPT. GENERALLY SPEAKING IT IS ONLY THE REAL INC OME WHICH CAN BE TAXED BUT THIS HAS TO BE UNDERSTOOD SUBJECT TO LIMITATIONS. COMMENTIN G ON THESE LIMITATIONS, THE LD. AUTHOR SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 1, (11 TH EDITION) HAS OBSERVED AT PAGE 343 AS UNDER:- 5. RESERVATIONS ON REAL INCOME THEORY. - WHETHER ACCRUAL OF INCOME HAS TAKEN PLACE OR NOT, MUST BE J UDGED ON THE PRINCIPLE OF THE REAL INCOME THEORY. AFTER ACCRUAL, NON-CHARGING OF TAX ON THE SAME BECAUSE OF CERTAIN CONDUCT BASED ON THE IPSE DIXIT OF A PARTICULAR ASSESSEE CANNOT BE ACCEP TED. IN DETERMINING THE QUESTION WHETHER IT IS HYPO THETICAL INCOME OR WHETHER REAL INCOME HAS MATERIALIZED OR NOT, VARIOU S FACTORS WILL HAVE TO BE TAKEN INTO ACCOUNT. IT WOULD BE DIFFICULT AND IMPROPER TO EXTEND THE CONCEPT OF REAL INCOME TO AL L CASES DEPENDING UPON THE SELF-SERVING STATEMENT O F THE ASSESSEE. WHAT HAS REALLY ACCRUED TO THE ASSESSEE HAS TO BE F OUND OUT AND WHAT HAS ACCRUED MUST BE CONSIDERED FR OM THE POINT OF VIEW OR REAL INCOME TAKING THE PROBABILITY OR IMPRO BABILITY OF REALIZATION IN A REALISTIC MANNER, BUT ONCE ACCRUAL TAKES PLACE, ON THE CONDUCT OF THE PARTIES SUBSEQUENT TO THE YEAR OF CLOSING, AN INCOME WHICH HAS BEEN ACCRU ED CANNOT BE MADE NO INCOME. 91 THE ABOVE POSITION CAN BE UNDERSTOOD BY EXAMININ G SOME OF THE PROVISIONS OF THE ACT WHICH WOULD SHOW THAT CONCEPT OF NOTIONAL INCOME CAN NOT BE EXTENDED IF SPECIFIC PROVISION IS AVAILABLE IN THE ACT. FOR EXAMPLE IN CASE OF INCOME FROM HOUSE PROPERTY, THE INCOME HAS TO BE DETERMINED AS PER SECTION 23. SECTION 22 OF THE INCOME TAX ACT PROVID ES THAT IT IS THE ANNUAL VALUE OF THE PROPERTY WHICH CAN BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SECTOR 23 PRESCRIBES THE METHOD FOR DETERMINING THE ANNUAL VALUE. SECTION 2 3(1)(A) READS AS UNDER:- 23. (1) FOR THE PURPOSES OF SECTION 22 , THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABL Y BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THER EOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED O R RECEIVABLE; OR. 92 ON THIS ASPECT THE SETTLED POSITION OF THE LAW I S THAT THE ANNUAL VALUE HAS TO BE DETERMINED EVEN IF THE PROPERTY IS NOT LET OUT. THIS POSITION HAS BEEN DI SCUSSED BY THE LD. AUTHOR CHATURVEDI & PITHISARIAS IN COMMENTARY OF INCOME TAX LAW (FIFTH EDITION) VOLUME 1 IN THIS RESPECT AT PAGES 1275 & 1276 OBSERVED AS UNDER: ANNUAL VALUE- DETERMINATION OF SECTION 23(1)(A) PROVIDES THAT FOR THE PURPOSES OF SECTION 22, THE A NNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTE D TO LET FROM YEAR TO YEAR. THE WORD USED IS MIGHT AND NOT CAN OR IS. IT IS THUS A NOTIONAL INCOME TO BE GATHERED FROM WHAT A HYPOTHETICAL TENANT WOULD PAY WHICH IS TO BE OBJECTIVELY ASCERTAINED ON A REASONABLE BASIS IRRE SPECTIVE OF THE FACT WHETHER THE PROPERTY IS LET OUT OR NOT [SULTAN BROS. PR. LTD. V. CIT, (1964) 51 ITR 353 (S C); JAMNADAS PRABHUDAS V. CIT, (1951)20 ITR 160(BOM); D.M. VAKIL V. CIT, (1946) 14 ITR 298, 302(BOM); CIT V. BIMAN BEHARI SHAW, SHEBAIT, (1968) 68 ITR 815 (CAL); SRI SRI RADHA GOVINDA JEW V. CIT, (1972) 84 ITR 150, 15 6 (CAL); CIT V. GANGA PROPERTIES LTD., (1970) 77 ITR 637, 647 (CAL); LIQUIDATOR, MAHMUDABAD PROPERTIES L TD. V. CIT, (1972) 83 ITR 470 (CAL), AFFIRMED, (1980) 124 ITR 31 (SC); CIT V. ZOROSTRIAN BUILDING SOCIETY LTD ., (1976) 102 ITR 499 (BOM); C.J. GEORGE V. CIT, (1973) 92 IT R 137 (KER); D.C. ANAND & SONS V. CIT, (1981) 131 I TR 77 (DEL). ALSO SEE, CIT V. PARBUTTY CHURN LAW, (196 5) 57 ITR 609, 619 (CAL); IN THE MATTER OF KRISHNA LAL SEAL, AIR 1932 CAL 836; LALLA MAL SAMGHAM LAL V. CIT, (19 36) 4 ITR 250 (LAH); NEW DELHI MUNICIPAL COMMITTEE V. NAND KUMAR BUSSI, (1977) TAX LR 2130 (DEL)] 93 SIMILAR VIEW HAS BEEN EXPRESSED BY SHRI N.A. PAL KHIVALA IN HIS COMMENTARY ON THE LAW LAND PRACTICE OF INCOME TAX, VOLUME 2 (EIGHTH EDITION) BY KANGA A ND PALKHIVALAS OBSERVATION AT PAGES 22 & 23. AGAI N EVEN SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCO ME TAX BY SAMPAT IYENGARS VOLUME 2, (11 TH EDITION) EXPRESSED IDENTICAL VIEWS IN HIS COMMENTARY AT PAGE 2738. 94 IN ALL THE LEADING COMMENTARIES CITED ABOVE, IT HAS BEEN OBSERVED THAT ANNUAL VALUE IS TO BE COMPUTED WHETHER PROPERTY HAS BEEN LET OUT OR NOT. THIS MEANS THAT NOTIONAL VALUE OF THE PROPERTY HAS TO BE CHARGED TO THE INCOME TAX 24 UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FROM THE ABOVE, IT BECOMES CLEAR THAT THOUGH THERE IS NO REAL INCOME FROM LETT ING OUT OF THE PROPERTY, STILL THE NOTIONAL ANNUAL VALUE IS SUBJECTED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, WE MAY MENTION THAT U/S 23(1)(C) OF THE ACT IF THE PROPERTY IS LET OUT AND THEN REMAINED VACANT FOR SO ME PART OF THE YEAR OR FOR WHOLE OF THE YEAR THEN VACANCY ALLOWANCE CAN BE CLA IMED. HERE, IT IS IMPORTANT TO NOTE THAT IF PROPERTY IS NOT LET OUT, THEN NOTIONAL INCOME BECOMES CHARGEABLE TO THE TAX BECAUSE OF PROVISIONS OF SECT IONS 22 AND 23 (1)(A) OF THE ACT. SIMILARLY, UNDER THE MAT PROVISIONS, IT IS BASICALLY THE NOTIONAL INCOME WHICH IS BEING SUBJECTED TO CHARGE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. A BUSINESSMAN MAY HAVE INCOME OF RS. 100/- BUT BECAUSE OF HIGHER DEPRECIATION ALLOWABLE UNDER THE INCOME-TAX ACT OR SOME OTHER WEIGHTED DEDUCTIONS SAY FOR EXAMPLE IN CASE OF EXP ENDITURE ON SCIENTIFIC RESEARCH, THE TAXABLE INCOME AS PER THE PROVISIONS OF THE ACT MAY BE ZERO BUT STILL BECAUSE OF THE MAT PROVISIONS, TAX HAS TO BE CHARGED ON BOOK PROFITS. SIMILARLY IN THE CASE OF PRESUMPTIVE TAX PROVISIONS E.G. U/S 44AD IF A PERSON IS CIVIL CONTRACTOR AND DOES NOT MAINTAIN BOOKS OF ACC OUNT AND HIS TURNOVER IS LESS THAN RS. 60 LAKHS THEN THE PROFIT WOULD BE PRE SUMED TO BE 8% OF TURNOVER EVEN IF HE HAS SUFFERED A LOSS. ANOTHER EXAMPLE O F SECTION 2(22)(E) CAN BE TAKEN. UNDER THIS PROVISION A LOAN OR ADVANCE GIVEN BY CERTAIN COMPANIES TO A SUBSTANTIAL SHARE HOLDER IS TO BE TREATED AS DEEMED DIVIDEND. SUCH LOAN UNDER THE NORMAL ACCOUNTING PRINCIPLE OR ON COMMERCIAL PR INCIPLES CANNOT BE REGARDED AS INCOME BUT BECAUSE OF THIS SPECIFIC PRO VISION REGARDING DEEMED DIVIDEND SUCH AMOUNT HAS TO BE TREATED AS INCOME OF THE PERSON RECEIVING SUCH LOANS. 95 THE ABOVE POSITION OF LAW MAKES IT ABSOLUTELY CL EAR THAT THEORY OF REAL INCOME IS SUBJECT TO THE PROVISIONS OF THE ACT AND WHENEVER ANY SPECIFIC PROVISIONS OF THE ACT IS THERE FOR CHARGING OF A PA RTICULAR ITEM OF INCOME, THEN THE SAME HAS TO BE CHARGED ACCORDINGLY. IT MAY BE SOMETIMES HARD TO THE ASSESSEES BUT AGAIN IT HAS BEEN HELD IN NUMEROUS D ECISIONS THAT FISCAL STATUES HAVE TO BE INTERPRETED ON THE BASIS OF LANG UAGE USED AND THERE IS NO SCOPE FOR EQUITY OR INTENT. LD. AUTHOR SHRI S. RAJ ARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 1, PAGE 236 IN THIS REGARD HAS OBSERVED AS UNDER:- ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COM ES WITHIN THE LETTER OF THE LAW, HE MUST BE TAXED, HOWEVER, GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND. CONSIDERATIONS OF HARDSHIP, INJUSTICE OR ANOMALIES DO NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATUTES UNLESS THERE BE SOME REAL AMBIGUITY. THUS, ANY BENE VOLENT CONSTRUCTION IN FAVOUR OF THE ASSESSEE HAS BEEN HEL D TO BE UNCALLED FOR. 96 THEREFORE, IT CAN BE SAID THAT GENERALLY SPEAKIN G NOTIONAL INCOME COULD NOT BE SUBJECTED TO TAX BUT WHENEVER THERE IS A SPE CIFIC PROVISION, THE SAME HAS TO BE TAXED. NOW, IN CASE OF CAPITAL GAIN, SEC TION 45 READ WITH SECTION 48 VERY CLEARLY PROVIDES THAT IT IS THE PROFIT ARISIN G FROM THE TRANSFER OF A CAPITAL ASSET WHICH WOULD BE SUBJECTED TO CHARGE OF CAPITAL GAIN TAX AND SECTION 48 CLEARLY PROVIDES FOR TAKING THE TOTAL CO NSIDERATION INTO ACCOUNT WHILE COMPUTING THE CAPITAL GAINS. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARA NO. 64 TO 68 FROM WHICH IT BECOMES C LEAR THAT IT IS THE WHOLE CONSIDERATION WHETHER RECEIVED OR ACCRUED, WHICH HA S TO BE TAXED UNDER THE CAPITAL GAIN ONCE TRANSFER OF THE CAPITAL ASSET TAK ES PLACE. ACCORDINGLY, THERE IS NO FORCE IN THIS PART OF THE CONTENTION. 97 NOW LET US EXAMINE THE ISSUE OF TAXABILITY OF FL AT ON THE BASIS OF ABOVE PRINCIPLES. RELEVANT PORTION OF CLAUSE 4 OF THE JD A WHICH DEALS WITH CONSIDERATION ARE AS UNDER: 4. CONSIDERATION 4.1 IT IS SPECIFICALLY UNDERSTOOD AND AGREED AMONGS T THE PARTIES THAT THDC SHALL USE ITS EXPERTISE AND ITS BRAND NAME AND / OR ANY OTHER BRAND NAME AT ITS DIS CRETION TO DEVELOP THE PROPERTY INTO THE PREMISES A S PER APPLICABLE BUILDING BYE-LAWS OF THE COMPETENT AUTHO RITY AND THE OWNER SHALL HAVE NO OBJECTION TO THE S AME IN WHATSOEVER MANNER. IN CONSIDERATION OF THE OWNER GR ANTING AND ASSIGNING, ITS DEVELOPMENT RIGHTS IN THE PROPERTY, IRREVOCABLY AND IN PERPETUITY, TO THDC TO DEVELOP THE PROPERTY AND FOR TRANSFER OF THE PROPE RTY UPON THE SURRENDER OF ALLOTMENT RIGHTS OF 500 SQ. YARDS AND/OR 1000 SQ. YARDS (AS THE CASE MAY BE) BY ITS MEMBERS TO THE OWNER, VIDE RESOLUTION DATED 04.01.2007 AND 25.02.2007 (COPY ATTACHED AS PER ANNEXURE I & II), HASH IS COMMITTED TO PAY TO THE OWNER AND / OR THE RESPECTI VE MEMBERS OF THE OWNER (AS THE CASE MAY BE) A TOTA L AMOUNT OF RS. 106,42,50,000/- (RUPEES ONE HUNDRED S IX CRORES FORTY TWO LACS FIFTY THOUSANDS ONLY) CALCULATED @ RS. 82,50,000/- (RUPEES EIGHTY TWO LAC S FIFTY THOUSANDS ONLY) PAYABLE TO 65 MEMBERS HAVIN G PLOT OF 500 SQ. YARDS EACH, RS. 1,65,00,000/- (RUPE ES ONE CRORE SIXTY FIVE LACS ONLY) PAYABLE TO 30 ME MBERS HAVING PLOT OF 1000 SQ. YARDS EACH AND RS. 3,30,00, 000/- (RUPEES THREE CRORES THIRTY LACS ONLY) PAYABL E TO THE OWNER FOR THE 4 PLOTS OF 500 SQ. YARDS EACH, WH ICH SHALL TANTAMOUNT TO THE FULL AND FINAL PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) IN A MANNER SET OUT HEREIN BEL OW (PAYMENT). FURTHER, THE TRANSFER, SALE AND CONVEY ANCE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE MADE BY THE OWNER IN FAVOUR OF THDC PRO RATA TO THE PAYMENT RECEIVED BY THE OWNER AND/OR THE RESPECTIVE MEMBER S OF THE OWNER (AS THE CASE MAY BE) FROM HASH BY EXECUTI NG SALE DEEDS AND REGISTERING THE SAME. IT IS EXPRE SSLY PROVIDED THAT AS RESOLVED BY THE OWNER, THE TOTAL A MOUNT PAYABLE BY HASH TO THE OWNER AND / OR THE RES PECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FOR ASSIG NMENT OF THE DEVELOPMENT RIGHTS AND FOR TRANSFER AN D SALE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE RS. 106,42,50,000/- (RUPEES ONE HUNDRED SIX CRORES FORTY TWO LACS FIFTY THOUSAND ONLY) AND ONE HUNDRED AND T WENTY NINE (129) FLATS CONSISTING OF SUPER AREA OF 2250 SQ. FEET (FLATS); ONE FLAT EACH FOR SIXTY FIVE ME MBERS HAVING A PLOT OF 500 SQ. YARDS, TWO FLATS FOR THE (THIRTY) 30 MEMBERS HAVING A PLOT OF 1000 SQ. YARDS AND 4 FLATS TO THE OWNER FOR THE 4 PLOTS OF 500 SQ. YARDS EACH AS PER LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B (SA LE TRANSACTION) 25 IT IS EXPRESSLY AGREED BETWEEN THE DEVELOPERS THAT HASH SHALL BE RESPONSIBLE FOR MAKING ALL PAYMENTS T O THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (A S THE CASE MAY BE) AS PER THE NEGOTIATED AND AGREED TERMS BETWEEN THE OWNER AND HASH, HASH EXPRESSLY UN DERTAKES TO MAKE TIMELY PAYMENTS OF THE PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OW NER (AS THE CASE MAY BE) AS UNDER: 4.2 AS RESOLVED BY THE OWNER, THDC EITHER BY ITSELF OR ALONG WITH HASH SHALL ALLOT THE FLATS IN THE NA ME OF MEMBERS OF THE OWNER AS PER LIST ANNEXED WITH TH IS AGREEMENT AS SCHEDULE B ATTACHED HEREIN (HEREINA FTER REFERRED TO AS THE ALLOTTEES). THE SPECIFICATIONS OF THE FLATS WOULD BE PROVIDED BY THE DEVELOPERS T O THE OWNER AND MORE PARTICULARLY DESCRIBED IN THE SCHEDULE C A TTACHED HEREIN (HEREINAFTER REFERRED TO AS THE SPECIFICATIONS). THE ALLOTMENT LETTERS SHALL BE I SSUED TO THE ALLOTTEES (MEMBERS OF THE OWNER) WITHI N FORTY-FIVE (45) DAYS FROM THE DATE OF SANCTION OF THE BUILDING PLANS / DESIGN AND DRAWING AND ON OBTAINING FINAL LICENSE/PERMISSION FOR THE DEVELOPMENT OF THE PROJE CT FROM THE COMPETENT AUTHORITY. THEREAFTER, THE PO SSESSION OF THE FLATS SHALL BE HANDED OVER TO THE ALLOTTEES WITHIN THIRTY(30) MONTHS FORM THE DATE OF ISSUANCE OF THE ALLOTMENT LETTER. IT IS EXPRESSLY PROVIDED THAT THE PAYMENT TO BE MAD E BY HASH TO THE OWNER AND/OR TO THE RESPECTIVE MEMBERS OF THE OWNER (AS T HE CASE MAY BE) AND THE FLATS TO BE ALLOTTED TO THE ALLOTTEES AS SET OUT IN THIS CLAUSE 4.2 SHALL HEREINAFTER BE COLLECTIVELY REFERRED TO AS THE ENT IRE CONSIDERATION 98 FROM THIS CLAUSE IT BECOMES ABSOLUTELY CLEAR THA T EACH MEMBER HAVING 500 SQYD OF PLOT WAS ENTITLED TO RECEIVE ONE FURNIS HED FLAT MEASURING 2250SQFT AND MEMBERS HAVING 1000SQYD FLAT WERE ENTITLED TO R ECEIVE TWO FURNISHED FLATS. THUS UPON EXECUTION OF THE JDA VESTED RIGHT CAME TO SUCH MEMBERS TO RECEIVE SUCH FLATS. ONCE THIS VESTED RIGHT ARISES OUT OF T HE ABOVE CONTRACT IT CAN EASILY BE SAID THAT THIS RIGHT HAS ALSO ACCRUED TO THE ASSESSEE. CLAUSE 4.2 MAKES IT ABSOLUTELY CLEAR THAT DEVELOPER I.E. THDC/ HASH WAS TO ALLOT THE LETTERS OF ALLOTMENT WITHIN 45 DAYS FROM FINAL SANC TION FROM THE COMPETENT AUTHORITY AND SUCH FLATS WERE PART OF ENTIRE CONSID ERATION. MERELY BECAUSE SUCH ALLOTMENT LETTER HAS NOT BEEN GIVEN BECAUSE OF SANCTIONS / PERMISSIONS COULD NOT BE OBTAINED BECAUSE OF PUBLIC INTEREST LI TIGATION BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT, IT CANNOT BE SAID THAT SUCH RIGHT HAS NOT ACCRUED. THOUGH IT MAY BE HARD ON THE ASSESSEE BUT IT IS WELL SETTLED THAT TAXATION AND EQUITY ARE STRANGERS. FURTHER COMMENT ING ON THIS ASPECT SHRI RAJARATHNAM IN HIS COMMENTARY HAS OBSERVED AT PAGE 5164 AS UNDER: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRUCTION WITHOUT BEI NG ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PR OCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN S TATUTORY CLARIFICATION IN SUCH CASES. IN VIEW OF THE INCREASING SCALE OF SUCH DEV ELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTOR Y CLARIFICATION OR CIRCULAR IS OVERDUE. 99 THESE COMMENTS AND THE OTHER DETAILED DISCUSSION ON THIS ASPECT CLEARLY SHOW THAT CAPITAL GAIN TAX HAS TO BE PAID O N THE TOTAL CONSIDERATION ARISING ON TRANSFER WHICH WOULD INCLUDE THE CONSIDE RATION WHICH HAS BEEN RECEIVED AS WELL AS THE CONSIDERATION WHICH HAS ARO SEN AND BECOME DUE AND MAY BE RECEIVED LATER ON. IN VIEW OF THIS DISCUSSI ON THIS CONTENTION IS REJECTED. 100 NINTH CONTENTION IS THAT THE ASSESSEE HAS ALREA DY TERMINATED THE AGREEMENT AND HAS REVOKED THE POWER OF ATTORNEY. WE FIND NO FORCE IN THIS SUBMISS IONS. 101 IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF MUMBAI BENCH OF THE TRIBU NAL IN CASE OF CHEMOSYN LTD. V ACIT (SUPRA). IN THAT C ASE THE ASSESSEE-COMPANY WAS OWNER OF TWO PLOTS BEA RING 256 & 257 IN GUNDABALI ANDHERI MUMBAI. THE ASSESSE E-COMPANY ENTERED INTO A DEVELOPMENT AGREEMENT WITH DIPITI BUILDERS FOR THE DEVELOPMENT RIGHTS FOR A CO NSIDERATION OF RS. 16.11 CRORES. DIPITI BUILDERS H AD ALSO AGREED TO CONSTRUCT 18000 SQFT CARPET AREA FOR THE BENEFIT OF ASSESSEE ON PLOT NO. 256. IN THE RETURN OF INCOME TOTAL CONSIDERATION WAS SHOWN ONLY AT RS. 16.11 CR ORES. IT WAS EXPLAINED THAT BEFORE DIPITI BUILDERS COULD START THE DEVELOPMENT /CONSTRUCTION WORK, ENTIRE PROPERTY COMPRISING OF PLOT NO. 256 & 257 WAS SOLD TO A THI RD PARTY M/S FINANCIAL TECHNOLOGY LTD. BY A TRIPARTITE CONVE YANCE DEED EXECUTED ON 5.7.2007 FOR RS. 29.11 CRORE S AND THEREFORE, ADDITIONAL CONSIDERATION OF RS. 13 CROR ES HAS BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2008- 09. THIS EXPLANATION WAS REJECTED BY THE ASSESSING OFFICER B ECAUSE ACCORDING TO HIM IT WAS A CASE OF TRANSFER U /S 2(47)(V) AND TOTAL CONSIDERATION HAS TO BE CHARGED IN THE YEAR OF TRANSFER. THE TRIBUNAL AFTER CONSI DERING THE PROVISIONS OF SECTION 45 & 48 POSED A QUESTION TO I TSELF THAT WHAT SHOULD BE THE CONSIDERATION IN THE CASE BEFORE THE BENCH. THE CASE LAW RELIED ON BY THE DEPARTMEN T WAS REJECTED BECAUSE SAME WAS RELEVANT TO ACCRUAL OF INTEREST. THE BENCH FOLLOWED THE DECISION OF KALPT ARU CONSTRUCTION OVERSEES PVT LTD. 13 SOT 194. IN THAT CASE THE ASSESSEE HAD AGREED TO SELL TO ITS SUBSIDIARY E QUITY SHARES FOR A CONSIDERATION OF RS. 1.25 CRORE S WHICH WAS FINALLY SETTLED AT RS. 1.00 CRORE AND THE TRIBUNAL HELD THAT THE CONSIDERATION OF RS. 1.00 CRORE HAS T O BE ACCEPTED. 102. FROM THE ABOVE DECISION IT IS NOT CLEAR WHETHE R IN CASE OF KALAPTARU CONSTRUCTION OVERSEES PVT LT D. (SUPRA) WHICH HAS BEEN FOLLOWED IN ABOVE CASE, WAS CONCERNING CAPITAL GAIN OR NOT? SECONDLY IT IS NOT CLEAR THAT WHETHER THE AMENDED CONSIDERATION I.E. SETTLEM ENT FOR RS. 1.00 CRORE WAS MADE IN THE SAME YEAR OR NOT? AS OBSERVED EARLIER WHILE DISCUSSING THE ISSUE OF N OTIONAL INCOME THAT PROVISIONS OF SECTION 45 R.W.S. 48, ARE ABSOLUTELY CLEAR AND THERE IS NO AMBIGUITY THAT ONC E A CAPITAL ASSET IS TRANSFERRED THEN WHOLE OF THE CONSIDERATION RECEIVED OR ACCRUING HAS TO BE CONSID ERED FOR THE PURPOSE OF TAXATION IN THE YEAR IN WHI CH THE TRANSFER HAS TAKEN PLACE. WE FURTHER FIND THAT IN THE JDA THERE IS A CLAUSE FOR TERMINATION OF THE AG REEMENT. RELEVANT CLAUSE 14 READS AS UNDER: 26 TERMINATION 14(I) SAVE AND EXCEPT THE PROVISION OF CLAUSE 26, THDC SHALL AT ALL TIMES HAVE THE RIGHT TO TERMINAT E THIS AGREEMENT IN THE EVENT THERE IS ANY MATERIAL BREACH OF THE REPRESENTATIONS, WARRANTIES, UNDERTAKINGS, DECLARATIONS, COVENANTS AND/OR OBLIGATIONS GIVEN BY THE OWNER UNDER THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH. I N THE EVENT THE AGREEMENT IS TERMINATION BY THDC, A LL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHA LL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSF ERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SH ALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO TH DC THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUS E 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMINATION . IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAI D AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGI STERED SALE DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF THDC. (II) IN THE EVENT ALL THE REQUISITE GOVERNMENT AND STATUTORY APPROVALS, AUTHORIZATIONS, CONSENTS, LIC ENSES, APPROVALS OF ALL THE PLANS/DESIGNS AND DRAWINGS AS MAY BE REQUIRED FOR THE DEVELOPMENT OF THIS PROPERT Y IN RELATION TO THE PROJECT AND TO UNDERTAKE THE PROJEC T ARE NOT GRANTED WITHIN NINE (9) MONTHS OF THE SUB MISSION OF THE FINAL PLANS/DESIGNS AND DRAWINGS TO THE COMPETE NT AUTHORITY FOR APPROVAL THEN THDC MAY AS ITS SOLE DISCRETION EITHER DECIDE THAT IT DOES NOT DESIRE TO UNDERTAKE AND COMPLETE THE PROJECT AND HENCE TERMI NATE THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOT ICE IN THIS REGARD OR DECIDE TO WAIT FOR ANY FURTHE R TIMES DEEMED FIT BY THDC FOR THE GRANT OF THE AFORESAID A PPROVALS AND LICENSES. IN THE EVENT THE AGREEMENT IS TERMINATED BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UP TO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION , THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADVANCE/E ARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHI N ONE MONTH OF SUCH TERMINATION. IN THE EVENT OF FAI LURE OF THE OWNER TO REFUND THE SAID AMOUNT, THE OW NER HEREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF THDC. (III) IN THE EVENT THDC IS UNABLE TO DEVELOP THE P ROPERTY DUE TO REFUSAL/NON GRANT OF APPROVALS, CONS ENTS, PERMISSION, LICENSES OR REVOCATION OF THE SAME BY T HE APPROPRIATE STATUTORY AUTHORITY, THEN THDC MAY A T ITS SALE DISCRETION TERMINATE THIS AGREEMENT. IN THE EVENT THE AGREEMENT IS TERMINATED BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHA LL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSF ERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SH ALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO T HDC THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUS E 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMINATION . IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAI D AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGI STERED SALE DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF THDC. (IV) THE OWNER SHALL HAVE THE RIGHT TO TERMINATE TH E AGREEMENT ONLY IN THE EVENT OF DEFAULT BY THE DEVELOPERS FOR MAKING THE PAYMENT IN ACCORDANCE WIT H THE TERMS OF THIS AGREEMENT AND THE ALLOTMENT OF FLATS WITHIN THE TIME PERIOD AS MENTIONED IN THIS AGREEME NT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH OR ANY FURTHER TIME AS MAY BE DESIRE D BY THE OWNER. IN THE EVENT THE AGREEMENT IS TERM INATED BY OWNER, ALL THE LANDS REGISTERED IN THE NAME OF T HDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DAT E OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SH ALL FORFEIT THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIO NED IN CLAUSE 4(I). 103 THE READING OF THE ABOVE CLAUSE WOULD SHOW THAT POWER OF TERMINATION HAS BEEN GIVEN IN MANY CIRCUMSTANCES TO THDC VIDE CLAUSE 14(I), (II) AND ( III). THE POWER FOR TERMINATION BY THE OWNER HAS B EEN MENTIONED IN CLAUSE 14(IV) ONLY. READING OF THIS C LAUSE WOULD SHOW THAT RIGHT TO TERMINATE WITH THE O WNER I.E. THE SOCIETY WAS AVAILABLE ONLY IN CASE OF DEFAULT I N MAKING THE PAYMENT. THE ISSUE REGARDING DEFAULT FOR MAKING PAYMENT HAS ALREADY BEEN DISCUSSED BY US IN PARAS 8 4 TO 86 ABOVE WHILE DISCUSSING THE ISSUE OF WILLING NESS ON THE PART OF THE TRANSFEREE TO PERFORM ITS PART OF T HE CONTRACT WE HAVE ALREADY HELD THAT THERE WAS NO DEFAULT ON THE PART OF DEVELOPER I.E. THDC/HASH IN MAKING THE PAYMENT, THEREFORE, THE ASSESSEE HAD NO RIGHT TO TERMINATE THE CONTRACT. IN ANY CASE WE FURTHER FIN D THAT CLAUSE 20 OF THE JDA REFERS TO ARBITRATION A ND IT IS CLEARLY PROVIDED THAT ALL THE DISPUTES UNDER IT SHOULD BE R EFERRED TO THE ARBITRATION. THEREFORE, IF THE SOCI ETY HAD SOME GRIEVANCE IT WAS DUTY BOUND TO GIVE A NOTICE FOR AP POINTMENT OF AN ARBITRATOR TO THE DEVELOPER. IN TH E ABSENCE OF SUCH NOTICE THE TERMINATION WILL NOT STAND SCRUTINY OF LAW. HERE IT IS ALSO PERTINENT TO NOTE THAT THO UGH IT WAS STATED THAT IRREVOCABLE POWER OF ATTORNEY HAS BEEN REVOKED AND SOME DOCUMENTS HAVE BEEN FILED BEFORE U S FOR REVOCATION BUT CLAUSE 6.7 OF THE JDA WHICH WE HAVE REPRODUCED EARLIER CLEARLY PROVIDES THAT SUCH POWER OF ATTORNEY CANNOT BE REVOKED. WE REPRODUCE CLAUSE 6. 7 AGAIN WHICH IS AS UNDER: 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS IN THE PRO PERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY M ORTGAGING THE PROPERTY AND REGISTER THE CHARGE WITH THE COMPETENT AUTHORITY AN D EXECUTE REGISTERED SALE DEEDS) AS SET OUT IN CLAUSE 4.1 (II), (III), (IV) AND (V) AND THE OWNER CONFIRMS, UNDERTAKES, DECLARES AND BINDS ITSELF NOT TO REVOKE THE SAME FOR ANY REASON WHATSOEVER OUT OF ITS OWN WILL AND DISCR ETION WITHOUT OBTAINING A SPECIFIC PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITUTED ATTORNEYS. 104 THE ABOVE CLEARLY SHOWS THAT THIS POWER OF ATTO RNEY COULD NOT BE REVOKED FOR ANY REASON WITHOUT OBTAINING SPECIFIC P RIOR WRITTEN CONSENT OF THDC/HASH. NO DOCUMENT SHOWING THE CONSENT OF THDC FOR REVOCATION OF THIS IRREVOCABLE POWER OF ATTORNEY HAS BEEN PRODUCED BEF ORE US. WE FAIL TO UNDERSTAND THAT IN THE ABSENCE OF SUCH DOCUMENT HOW THE ASSESSEE CAN CLAIM THAT THIS POWER OF ATTORNEY HAS BEEN REVOKED. AS D ISCUSSED EARLIER WHILE CONSIDERING THE LEGAL POSITION, WE WOULD AGAIN RECA LL THE WORDS OF HON'BLE AUTHORITY FOR ADVANCE RULING IN CASE OF JASBIR SING H SARKARIA (SUPRA) WHEREIN AT PARA 33 OF THE DECISION WHILE DISCUSSING THE ISS UE IN RESPECT OF POWER OF ATTORNEY, IT WAS HIGHLIGHTED THAT EXECUTION OF IRRE VOCABLE POWER OF ATTORNEY IS OF SIGNIFICANT NATURE AND THE WORDS IRREVOCABLE A RE VERY IMPORTANT. THE EXPRESSION IRREVOCABLE ITSELF SHOWS THAT NORMALLY SUCH ATTORNEY CANNOT BE REVOKED. THEREFORE, NO COGNIZANCE CAN BE TAKEN IN RESPECT OF REVOCATION OF 27 THE IRREVOCABLE POWER OF ATTORNEY. IN THE ABSENCE OF SPECIFIC CONSENT AS PROVIDED IN CLAUSE 6.7 OF THE JDA FROM THDC. 105 WE MAY ALSO NOTE THAT CIT D.R HAS POINTED OUT T HAT TOTAL CONSIDERATION WAS TO BE DETERMINED AS UNDER: (I) CONSIDERATION IN CASH (RS. 82,50,000 X 129 PLOTS) RS. 106,42,50,000/- (II) CONSIDERATION IN KIND (RS. 101,25,000/- X 129 PLOTS) RS. 130,61,25,000/- TOTAL RS. 237,03,75,000/- AVERAGE COST OF CONSIDERATION RS. 11.18 CRORES PER ACRE (TOTAL CONSIDERATION OF RS. 237.03 CRORES DIVIDED B Y 21.2 ACRES OF LAND) IT IS CLAIMED ON BEHALF OF THE ASSESSEE THAT JDA HA S BEEN CANCELLED AND THE DEVELOPER HAS BEEN ALLOWED TO RETAIN THE PROPERTY WHICH HAS ALSO BEEN CONVEYED TO DEVELOPER THROUGH TWO SALE DEEDS. IF THAT IS SO THEN WHAT WOULD HAPPEN TO THE BALANCE CONSIDERATION BECAUSE I N SUCH SITUATION THE ASSESSEE HAS RECEIVED CONSIDER ATION OF ONLY ABOUT RS. 5 CRORESS PER ACRE BECAUSE THE AS SESSEE HAS REGISTERED LAND MEASURING 3.08 ACRES FOR RS. 15.48 CRORES THROUGH FIRST CONVEYANCE DEED, WHEREAS CONSIDERATION AS PER ORIGINAL AGREEMENT WAS RS. 11 .18 CRORES PER ACRE AS SHOWN ABOVE. THE DIFFERENCE IS BECAUSE OF NON RECEIPT OF CONSIDERATION IN KIND AND THE ASSESSEE HAS NOT SHOWN ANY EVIDENCE THAT IT HAS MAD E THE CLAIM FOR RECEIPT OF BALANCE CONSIDERATION. THIS LEADS TO THE CONCLUSION THAT THERE WAS NO CANCELLAT ION OF THE JDA. 106 SOME ARGUMENTS WERE MADE BY BOTH THE PARTIES TH AT IF THE CONTRACT IS FINALLY STAND ABANDONED THEN WHAT WOULD HAPPEN. THE CONTENTION ON BEHALF OF THE ASSESSEE IS THAT IF THE CONTRACT IS ABANDONED THEN THE ASSESSEE WOULD HAVE PAID TAX IN THE YEAR OF TRANSFE R AND WOULD BE LEFT WITH NO RECOURSE FOR RELIEF. T HE CONTENTION ON BEHALF OF THE DEPARTMENT WAS THAT THE ASSESSEE COULD ALWAYS FILE REVISED RETURN OR MAKE A PETITION U/S 264 AND SOME RELIEF WAS POSSIBLE IN CA SE OF THE ASSESSEE. HOWEVER, IF REVENUE FAILS TO T AX THE TOTAL CONSIDERATION IN THE YEAR OF TRANSFER THEN SAME CA NNOT BE SUBJECTED TO TAX IN ANY OTHER YEAR. WE FIN D THAT THIS QUESTION WAS SERIOUSLY CONSIDERED BY THE LD. AUTHOR ITY FOR ADVANCE RULING IN CASE OF JASBIR SINGH KATA RIA (SUPRA) WHICH HAS BEEN RELIED ON BY BOTH THE PARTIE S FOR VARIOUS ASPECTS. IN THAT CASE IT WAS OBSERVE D AT PARA 39 AS UNDER: WE HAVE TO ADVERT TO ONE ASPECT WHICH HAS CAUSED S OME CONCERN TO US. WHAT WILL HAPPEN IF DURING THE YEAR FOLLOWING THE ONE IN WHICH THE DEEMED TRANSFER TOOK PLACE, THE PROPOSED VENTURE COLLAPSES FOR REASONS SUCH AS REFUSAL OF PERMISSIONS, THE DEVELOPER FACING FINANC IAL CRUNCH ETC. BY THAT TIME, THE OWNER WOULD HAVE RECEIVED ONLY A PART OF THE AGREED CONSIDERATION, BUT HE IS OBLIGED TO FILE THE RETURN SHOWING THE ENTIRE CAPIT AL GAIN BASED ON THE FULL SALE PRICE WHETHER OR NOT RECEIVED DURI NG THE YEAR OF DEEMED TRANSFER. IN SUCH AN EVENTUA LITY, HARDSHIP MAY BE CAUSED TO THE OWNER WHO WOULD HAVE PAID FULL TAX. NO DOUBT, SUCH A SITUATION COULD BE AVOIDED IF THE CONTENTION OF THE APPLICANT IS ACCEP TED. ON DEEP CONSIDERATION, HOWEVER, WE FIND THAT THE CONSTRUCTION OF THE RELEVANT PROVISION SHOULD NOT B E CONTROLLED BY GIVING UNDUE IMPORTANCE TO SUCH HYP OTHETICAL SITUATIONS. NORMALLY, THE OWNER EXECUTES A POWER O F ATTORNEY OR DOES SIMILAR ACT TO LEFT THE TRANSFER EE TAKE POSSESSION ONLY AFTER THE BASIC PERMISSIONS ARE GRA NTED AND HE IS SATISFIED ABOUT THE ABILITY OF TRANSFEREE/DEVELOPER TO FULFIL THE CONTRACT. IN SP ITE OF THAT, IF SUCH RATE SITUATIONS TAKE PLACE, TH E OWNER/TRANSFEROR WILL NOT BE WITHOUT REMEDY. HE CAN FILE A REVISED RETURN AND MAKE OUT A CASE FOR EXCLUSION OR REDUCTI ON OF INCOME. HOWEVER, IF THE TIME-LIMIT FOR FILING A RE VISED RETURN EXPIRES, THE DIFFICULTY WILL ARISE. I T IS FOR PARLIAMENT OR THE CENTRAL GOVERNMENT TO PROVIDE A REMEDY TO TH E ASSESSEE IN SUCH CASES. MOREOVER, THE OTHER SIDE OF THE PICTURE AS DEPICTED IN PARAGRAPH 27 (SUPRA) SHOULD ALSO BE KEPT IN VIEW. HERE THE COMMENTS OF SHRI RAJARATNAM QUOTED AT PAR A 5164 ABOVE ARE ALSO RELEVANT AGAIN: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX , WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRUCTION WITHOUT BEI NG ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PR OCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN S TATUTORY CLARIFICATION IN SUCH CASES. IN VIEW OF THE INCREASING SCALE OF SUCH DEV ELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTOR Y CLARIFICATION OR CIRCULAR IS OVERDUE. WE MAY MENTION HERE THAT NO DOUBT SOMETIMES AN ASS ESSEE MAY BE PUT IN A DIFFICULT SITUATION AND AS MENTIONED BY HON'BLE AUTHORITY IN CASE OF JASBIR SI NGH SARKARIA (SUPRA) AS WELL AS LD. AUTHOR SHRI RAJ ARATNAM IT IS FOR THE LEGISLATURE TO TAKE CORRECTIVE STEPS. H OWEVER, IT MAY NOT BE OUT OF PLACE THAT IF CONSIDER ING THE DIFFICULTY THE INTERPRETATION GIVEN BY THE LD. COUNSEL OF THE ASSESSEE IS ACCEPTED THEN THE REVENUE MAY NOT BE AB LE TO TAX SUCH ASSESSEES WHEN THESE DIFFICULTIES ARE REMOVED. FOR EXAMPLE IN THE PRESENT CASE IF TOMORROW WHEN ALL PERMISSIONS ARE OBTAINED AND CONSTRUCTION IS COMPLE TED AND IF NO TAXES ARE HELD TO BE PAYABLE THEN LAT ER ON ALSO THE ASSESSEE MAY NOT BE SUBJECTED TO ANY TAX U NDER THE HEAD CAPITAL GAIN BECAUSE THEN IT CAN BE EASILY CONTENDED ON BEHALF OF THE ASSESSEE THAT THE TRANSF ER HAS ALREADY TAKEN PLACE ON THE DATE WHEN IRREVOC ABLE POWER OF ATTORNEY WAS EXECUTED. IN THAT SITUATION THE REVENUE WILL HAVE NO REMEDY. 107 THE ABOVE CLEARLY SHOWS THAT SUCH HYPOTHETICAL CONSIDERATION CANNOT BE CONSIDERED FOR GIVING TRUE MEANING TO A PARTICULAR PROVISION. IT HAS ALSO BEE N OBSERVED THAT IN SOME GENUINE CASES THE DIFFICULT IES MAY ARISE BUT IT WAS FOR THE PARLIAMENT OR THE GOVERNME NT TO PROVIDE REMEDY IN SUCH CASES AND JUDICIAL FOR UMS CANNOT DO ANYTHING. THEREFORE, IN VIEW OF THE PRO VISIONS OF SECTION 45 R.W.S. 48 WE ARE OF THE OPINI ON THAT SUBSEQUENT EVENTS, IF AT ALL ANY WILL NOT MAKE ANY DIFFERENCE BECAUSE TOTAL CONSIDERATION RECEIVED OR ACCRUED HAS TO BE ASSESSED IN THE YEAR OF TRANSFER. WE MAY ALSO NOTE THAT IT WAS STATED THAT IRREVOCABLE POWER OF ATTORNEY HAS BEEN REVOKED BUT THE WORD IRREVOCABLE ITSELF SHOWS THAT IN THE EYES OF LAW SPECIAL POWE R OF ATTORNEY COULD NOT HAVE BEEN REVOKED. IN VIEW OF T HIS ANALYSIS, WE ARE OF THE OPINION THAT EITHER THE JDA HAS NOT BEEN CANCELLED OR IN ANY CASE THE SAME CANNOT B E CONSIDERED FOR DETERMINING THE TAXATION OF CAPITA L GAIN. ACCORDINGLY THIS CONTENTION IS REJECTED. 28 108 THE NEXT CONTENTION OF THE ASSESSEE IS THAT EVE N IF THE WHOLE CONSIDERATION HAS TO BE TAXED THEN VALUE OF THE FLA TS CANNOT BE TAKEN AT RS. 4,500/- PER SQ. FEET. IT IS ALSO POINTED OUT THAT I N VIEW OF THE AGREEMENT BETWEEN THE HASH & THDC CONSIDERATION HAS BEEN SHOW N AT RS. 2,000/- PER SQ. FEET FOR 126 FLATS WHEREAS IT IS RS. 4,500/- PE R SQ. FEET FOR THREE FLATS. WE FIND NO FORCE IN THESE SUBMISSIONS. THE ASSESSEE HA S FILED ALONG WITH THE WRITTEN SUBMISSIONS COPY OF THE ADDENDUM OF AGREEME NT BETWEEN THDC AND HASH BY JOINT DEVELOPER (AT PAGE 265 & 266) AND TH IS ISSUE IS DISCUSSED IN CLAUSE 5 WHICH IS AS UNDER:- 5. CLAUSES 4.1, 4.2, 4.3 AND 4.4 ON THE PAGE NOS. 18 AND 19 OF THE AGREEMENT SHALL STAND AMENDED, MODIFIED AND SUBSTITUTED BY T HE FOLLOWING:- 4.1 IT IS EXPRESSLY AGREED AND UNDERSTOOD BY AND BE TWEEN THE PARTIES HERETO (A) IN THE RATIO OF 72,28 BETWEEN THDC AND HASH I N CASE GROSS SALES PROCEEDS DOES NOT EXCEED RS. 1272 CRORES; (B) IN THE RATIO OF 70: 30 BETWEEN THDC AND HASH IN CASE GROSS SALES PROCEEDS IS EQUAL TO RS. 1272 CROR ES; (C) IN ADDITION (B), IN THE RATIO OF 60: 40 BETWE EN THDC AND HASH IN RESPECT OF GROSS SALES PROCEEDS IN EXCESS OF RS. 1272 CRORES. IT IS AGREED THAT THE MINIMUM GUARANTEED AMOUNT FR OM THE GROSS SALES PROCEEDS FOR THDC AND HASH IS RS. 890.40 CRORES AND RS. 225.76 CRORES RESPECTIVELY. THE MINIMUM GUARANTEED AMOUNT OF RS. 225.76 CRORES TO HASH INCLUDES RS. 58.88 CRORES THAT SHALL BE EXPENDED BY THDC TOWARDS CONSTRUCTION OF 126 FLATS EQUIVALENT TO 2,83,500 SQ . FT,, WHICH FLATS ARE TO BE ALLOTTED IN THE NAMES OF THE MEMBERS OF THE SOCIETY OR OTHERWISE, AS THE CASE MAY BE, CALCULATED AS RS. 2000 PER SQ. FT. FOR THE AREA 2,83,500 SQ. FT. AND THE 72% SHARE OF 3 FLATS OF 2250 SQ. FT. TO BE PURCHASE D BY HASH @ RS, 4500/- PER SQ. FT. SHOULD THE APPLICATION OF THE RATIO STI PULATED IN (A) ABOVE RESULT IN HASH BEING ENTITLED TO A SUM GREATER THAN THE MINIM UM GUARANTEED AMOUNT AND THDC BEING ENTITLED TO A SUM LESS THAN THE MINI MUM GUARANTEED AMOUNT, THDC SHALL-BE ENTITLED TO THE ENTITLEMENT OF HASH WHICH IS IN EXCESS OF ITS MINIMUM, GUARANTEED AMOUNT UNTIL THDC ACHIEVES ITS MINIMUM GUARANTEED AMOUNT.-THE SAME IS ILLUSTRATED IN ANNEXURE I HERET O. 109 THE ABOVE CLEARLY SHOWS THAT HASH WAS ENTITLED TO TOTAL PROCEEDS OF RS. 225.76 CRORES OUT OF TOTAL PROCEEDS OF THE PROJ ECT WHICH WERE AGREED TO BE SHARED BY THDC AND HASH BUT THE PORTION OF HASH INC LUDES A SUM OF RS. 58.88 CRORES WHICH WAS REQUIRED TO BE SPENT TOWARDS CONSTRUCTION OF 126 FLATS EQUIVALENT TO 283500 SQUARE FEET AREA WHICH WERE TO BE ALLOTTED TO THE MEMBERS OF THE SOCIETY. THUS, IT IS CLEAR THAT FIG URE OF RS. 2,000/- PER SQ. FEET REPRESENTS ONLY THE COST OF CONSTRUCTIONS TO B E INCURRED BY THDC WHICH WAS DEBITED TO THE ACCOUNT OF HASH. FURTHER, HASH HAS AGREED TO PURCHASE THREE FLATS @ 4,500/- PER SQUARE FEET. SOME NEWS R EPORTS WERE QUOTED BEFORE US IN ONE OF THE CASES TO SHOW THAT VARIOUS BROKERS HAD ISSUED VARIOUS ADVERTISEMENTS FOR SALE OF THESE FLATS AND THESE FL ATS WERE ULTIMATELY TO BE SOLD AT RS. 7,000/- TO RS. 10,000/- PER SQUARE FEET . THIS ALSO BECOMES CLEAR FROM THE ADDENDUM OF AGREEMENT IN TERMS OF TOTAL PROCEEDS OF 1272 CRORES. IN ANY CASE IF THE COST OF CONSTRUCTION IS RS. 2,00 0/-, THEN COST OF LAND WHICH HAS BEEN PAID TO THE SOCIETY IS ALSO TO BE ADDED TO THE COST OF THE FLAT BECAUSE THIS PORTION OF CONSIDERATION IN ANY CASE WAS RECEI VED OR TO BE RECEIVED LATER BY THE SOCIETY IN CASH. CONSIDERING THE PRESENT MA RKET VALUE OF THE FLATS IN AND AROUND CHANDIGARH AREA WHICH IS RS. 4,000/- TO 12,000/- PER SQUARE FEET WE ARE OF THE OPINION THAT VALUE OF THE FLAT AT RS. 4,500/- PER SQUARE FEET IS ABSOLUTELY FAIR. IN ANY CASE M/S HASH HAS AGREED T O PURCHASE THE FLATS AT THIS RATE FROM M/S THDC. IT MAY BE NOTED AS POINTED OUT BY THE LD. DR FOR THE REVENUE SOME OF THE NEWS REPORT CLIPPINGS FILED BY VARIOUS ASSESSEES CLEARLY SHOWS THAT FLATS WERE BOOKED IN THE TATA CAMLEOT (THIS WAS THE NAME WHICH WAS GIVEN TO THE PROJECT WHICH WAS TO BE DEVELOPED ON THE LAND OF TWO SOCIETIES) IN THE PRE LAUNCH OFFER IN THE RANGE OF RS. 7500 TO 8000 PER SQFT. IT IS A COMMON KNOWLEDGE THAT RATES IN PRE LAUNCH OFFE R ARE LOWER THAN THE RATES WHEN BOOKINGS OPEN FOR THE PUBLIC. CONSIDERING THE SE FACTS WE ARE OF THE OPINION THAT ASSESSING OFFICER HAS ESTIMATED THE VA LUE OF THE FLATS ON MOST REASONABLE BASIS. IN VIEW OF THESE OBSERVATIONS TH IS CONTENTION IS REJECTED. 110 THE LD. COUNSEL FOR THE ASSESSEE HAD MADE SOME SUBMISSIONS ON THE ISSUE OF DEDUCTION U/S 54F. HE HAS POINTED OUT THA T THIS ISSUE HAS BEEN REJECTED WRONGLY BY CIT(A). HOWEVER, CAREFULLY PER USAL OF THE GROUNDS OF APPEAL SHOW THAT NO GROUND IN RESPECT OF DEDUCTION U/S 54F HAS BEEN RAISED BEFORE US AND, THEREFORE, WE DECLINE TO ADJUDICATE THIS ISSUE AND ALL THE ARGUMENTS MADE IN THIS BEHALF ARE REJECTED. THOUGH REFERENCE WAS MADE TO GROUND NO. 2.3 IN THIS REGARD. THE PERUSAL OF GROU NDS NO. 2.3 WOULD SHOW THAT REFERENCE HAS BEEN MADE ONLY TO SECTION 54 AND SECTION 54EC. SECTION 54 DEALS WITH DEDUCTION IN CASE THE ASSESSEE BEING AN INDIVIDUAL OR HUF, TRANSFERS THE RESIDENTIAL HOUSE AND IN CASE BEFORE US, THE ASSESSEE HAS TRANSFERRED THE PLOT. THEREFORE, IT CANNOT BE SAI D THAT DEDUCTION U/S 54F AND 29 54 IS SAME. SINCE NO GROUND HAS BEEN RAISED FOR DE DUCTION U/S 54F, WE REJECT THIS CONTENTION. 111 GROUND NO. 3 - THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT WITHOUT PREJUDICE TO THE ISSUES RAISED IN GROUNDS NO. 2, 5 & 6, CAPITAL GAIN SHOULD HAVE BEEN TAXED IN THE HANDS OF THE SOCIETY WHICH IS LEGAL OWNER OF THE LAND. 112 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITTED THAT THE SOCIETY WAS ACTING ON BEHALF OF THE MEMBERS AND THE MEMBERS HAVE SURRENDERED THEIR RIGHTS IN FAVOUR OF THE SOCIETY SO AS TO ENABLE THE SOCIETY TO ENTER INTO JDA FOR TRANSFER OF PROPERTY IN FAVOU R OF THE DEVELOPER I.E. THDC/HASH. THEREFORE, CAPITAL ASSET HAS BEEN SOLD BY THE MEMBERS. FURTHER THE CONSIDERATION WAS TO BE RECEIVED FROM HASH BY T HE INDIVIDUAL PLOT OWNERS. 113 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND THAT THE SOCIETY WAS FORMED BY VARIOUS MEMBERS FOR THE PURPO SE OF PURCHASE OF LAND AND TO DEVELOP THE SAME AND THEY ALLOTTED THE PLOTS TO THE MEMBERS. THE SOCIETY PURCHASED 21.2 ACRES OF LAND AND ULTIMATELY PLOTS IN THE SIZES OF 500SQYD AND 1000SQYD WERE ALLOTTED TO VARIOUS MEMBE RS. WHEN THE PROPOSAL FOR DEVELOPMENT OF PROPERTY CAME IT WAS RESOLVED IN THE GENERAL BODY MEETING OF THE SOCIETY THAT THE MEMBERS WOULD SURRENDER THE IR RIGHTS IN FAVOUR OF THE SOCIETY SO THAT THE SOCIETY CAN ENTER INTO THE JDA. THUS IT IS CLEAR THAT THE SOCIETY HAS ENTERED INTO JDA ON BEHALF OF THE MEMBE RS. IT IS THE MEMBERS WHO ARE OWNING THE PLOTS AND THE SOCIETY WAS ONLY A FACILITATOR. IT BECOMES CLEAR FROM THE JDA THAT PAYMENT FOR CONSIDERATION W AS TO BE MADE TO AN INDIVIDUAL PLOT HOLDER AND IN FACT CONSIDERATION WA S MENTIONED IN TERMS OF PER MEMBER. EACH MEMBER HOLDING 500SQYD PLOT WAS TO RE CEIVE A SUM OF RS. 82,50,000/- AND ONE FULLY FURNISHED FLAT MEASURING 2250 SQFT AND THE MEMBERS HOLDING 1000SQYD PLOT WERE TO RECEIVE MONETARY CONS IDERATION OF RS. 1.65 CRORES PLUS TWO FLATS MEASURING 2250 SQFT. IN FACT THE PAYMENT OF CHEQUES IS MADE BY HASH BY ISSUING CHEQUES IN THE NAME OF INDI VIDUAL MEMBER AND NOT THE SOCIETY. THIS FACT STANDS ADMITTED BECAUSE ASS ESSEE HAS FILED A RETURN DECLARING CAPITAL GAIN AGAINST PART MONEY RECEIVED AGAINST HIS PLOT. THUS IT BECOMES CLEAR THAT IT IS THE INDIVIDUAL MEMBER WHO ARE LIABLE TO TAX IN RESPECT OF TRANSFER TO PLOTS AND THE SOCIETY BEING ONLY A F ACILITATOR OR POST OFFICE. SOME MORE DETAILS HAVE BEEN DISCUSSED IN THIS RESPE CT WHILE ADJUDICATING THE APPEAL OF PUNJABI COOP HOUSE BUILDING SOCIETY LTD. IN ITA NO. 310/CHD/2012 AND 556/CHD/2012 WHICH HAVE BEEN ADJUDICATED LITTLE LATER IN THIS ORDER ITSELF. ACCORDINGLY WE FIND NO FORCE IN THE SUBMISSIONS AN D THIS GROUND IS REJECTED. FOLLOWING THE ABOVE ORDER ISSUE RAISED BY THE ASSES SEE ARE DECIDED AGAINST THE ASSESSEE. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15/07/2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15/07/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR
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